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Aetna, Humana, Other HMOs Slip on Web Site Glitches

NEW YORK (TheStreet) --- I began my coverage of Aetna and Humana and five other health maintenance stocks back on July 9 when I wrote Obamacare Delay Is Good for Health Stocks. In this post, I noted that only one had a buy rating, according to www.ValuEngine.com.

In my subsequent post on Oct. 3, Health Care Stocks Shift Sideways As Obamacare Registration Begins, the seven stocks had gains between 2.4% and 25.7% and two had upgrades to buy, making three of seven buy-rated.

Between Oct. 2 and Oct. 22, five of the seven stocks slipped in price by 1.5% to 5.6% as glitches on www.Healthcare.gov limited early signups. Between Oct. 2 and Oct. 22 the S&P 500 was up 3.6%. Today, five of the seven health maintenance stocks have buy ratings.

I have not tried the Web site as my wife and I have Medicare with the supplements to give us full health care coverage. However, as an engineer and former computer programmer, I am shocked the launch of this mandated Web site would be allowed to take place without appropriate quality control testing. Let's hope that the exchanges can be up and running in time for full deployment of the Affordable Care Act in January 2014.

ValuEngine shows the medical industry is 21.3% overvalued, with the health maintenance industry 16.7% overvalued. I continue to give the medical sector an equal-weight rating; 59.2% of the 784 stocks in this sector have hold ratings.

Today, all seven stocks are overvalued by 2.7% to 42.8%. All have gains over the last 12 months between 21.8% and 71.6%. All are above their 200-day simple moving averages, which reflects the risk of reversion to the mean.

Reading the Table

OV / UN Valued -- The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating -- A "1-Engine" rating is a strong sell, a "2-Engine" rating is a sell, a "3-Engine" rating is a hold, a "4-Engine" rating is a buy and a "5-Engine" rating is a strong buy.

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