This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

10 Top Morningstar M&A Stock Picks for 2012

Stocks in this article: RIG MOS NDAQ CRL AGP NIHD ABMD DHX ICLR CHS

Amerigroup

Managed healthcare company Amerigroup (AGP), which has a specialty in providing publicly funded healthcare programs to Medicaid and Children's Health Insurance recipients is Morningstar's strongest healthcare takeover target because of an expected inflow of patients to the company when the Affordable Care Act becomes effective in 2014 if it's not overturned.

"Amerigroup - with its 2 million Medicaid members spread across 11 states - seems like a particularly attractive target," writes Morningstar.

A takeover could create back office efficiencies, while also providing a larger corporate managed healthcare provider an inroad into growing publicly funded healthcare programs. " The company has specialized expertise that could enable a historically commercial-market-focused peer such as Aetna (AET) to compete in the Medicaid business," adds Morningstar. Currently, Morningstar also sees Amerigroup shares as 20% undervalued, even without a M&A catalyst.

Morningstar gives Amerigroup a three star rating and a fair value of $76 a share, a near 10% premium to its current share price of $69.78. The company is expected to earn $61 cents a share in its fourth quarter 2011 results due on Feb. 17, according to Zacks consensus estimates. Analysts give the company an estimated price target of $68 a share on 2012 revenue of $8.2 billion and profit of $188 million, according to data compiled by Bloomberg. For more on managed healthcare sector shares, see TheStreet's portfolio of top-rated managed healthcare stocks.

8 of 11

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs