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,
, 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
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.
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.
Last 12-Month Return (%) -- Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.
Forecast One-Year Return -- Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the Table are projected to move higher by that percentage over the next 12 months.
Value Level: is the price at which to enter a GTC Limit Order to buy on weakness. The letters mean; W-Weekly, M-Monthly, Q-Quarterly, S-Semiannual and A- Annual.
Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.
Risky Level: The price at which to enter a GTC Limit Order to sell on strength.
When you look at the performances of the seven health maintenance stocks between Oct. 2 and Oct. 22, keep in mind that the S&P 500 is 3.6% from its Oct. 2 close and its Oct. 22 close.
($63.79 vs. $64.76 on Oct. 2) -- Between July 8 and Oct. 2, this stock was up just 2.4% despite setting a multi-year high at $69.19 on Sept. 16. From Oct. 2 through Oct. 22, this stock slipped 1.5% lagging the 3.6% gain of the S&P 500. The nation's largest health benefits company still has a buy rating with a semiannual value level at $60.96, an annual pivot at $62.77 and quarterly and monthly risky levels at $65.82 and $70.72.
($65.92 vs. $64.30 on Oct. 2) -- Between July 8 and Oct. 2, this stock popped 18%, but between Oct. 2 and Oct 22, it tacked on just 2.5%, which lags the S&P gain of 3.6%. The provider of health care services to individuals set a multiyear high at $67.84 on Oct. 22. My monthly value level is $63.01 with a quarterly pivot at $65.01 and weekly risky level at $67.64. Centene reported quarterly results on Oct. 22 and beat EPS estimates by 5 cents, earning 88 cents a share.
($31.03 vs. $32.87 on Oct. 2) -- Between July 8 and Oct. 2, this stock gained just 2.5%, setting a multiyear high at $33.90 on Sept. 16. Between Oct. 2 and Oct. 22, this buy-rated managed-care provider slipped 5.6% vs. the S&P gain of 3.6%. The 200-day SMA is $29.90 with an annual pivot at $32.54 and monthly and annual risky levels at $33.18 and $35.35.
($92.82 vs. $94.87 on Oct. 2) -- Between July 8 and Oct. 2, this stock gained 12.6%, setting a multiyear high at $99.85 on Sept. 16. Between Oct. 2 and Oct. 22, this buy-rated provider of health care services networks slipped 2.2% vs. the S&P gain of 3.6%. My semiannual value level is $90.53, with an annual pivot at $91.58 and a weekly risky level at $94.56.
My son is an insurance agent for Bankers Life and Casualty, which is a business segment of multi-line insurance company
CNO Financial Group
($15.04). Other segments are Colonial Penn and Conseco Insurance Group. Bankers Life has an affiliation with Humana, and so agents can also offer health insurance plans. CNO Financial has a hold rating and set a multiyear high at $15.25 on Oct. 22. My semiannual value level is $14.08 with monthly and quarterly risky levels at $15.44 and $15.50.
($68.86 vs. $72.57 on Oct. 2) -- Between July 8 and Oct. 2, this stock gained 7.4%, setting a multiyear high at $75.88 on Sept. 16. Between Oct. 2 and Oct. 22, this buy-rated health care provider and
component slipped 5.1% vs. the S&P gain of 3.6%. My semiannual value level is $62.39 with weekly and semiannual risky levels at $71.38 and $73.01. UnitedHealth reported quarterly results on Oct. 17 with an EPS miss of 1 cent, earning $1.53 a share.
WellCare Health Plans
($70.00 vs. $72.71 on Oct. 2) -- Between July 8 and Oct. 2, this stock gained 25.7%, setting a multiyear high at $73.41 on Oct. 4. Between Oct. 2 and Oct. 22, this hold-rated provider of managed care services targeted to government-sponsored health care programs slipped by 3.7% vs. the S&P 500 gain of 3.6%. The 50-day SMA is $68.38 with an annual pivot at $69.44 with a semiannual risky level at $72.05.
($88.43 vs. $86.60 on Oct. 2) -- Between July 8 and Oct. 2, this stock gained 4.2%, setting a multiyear high at $90 on July 24, which was nearly retested on Sept. 16 and Oct. 16. Between Oct. 2 and Oct. 22, this buy-rated health benefits company with affiliations with some Blue Cross and Blue Shield associations gained 2.1%. Weekly and semiannual value levels are $85.96 and $83.77 with a monthly risky level at $90.30. WellPoint reported quarterly results Wednesday and beat EPS estimates by 27 cents, earning $2.10 a share. The company also beat on the revenue line.
At the time of publication, the author had no position in any of the stocks mentioned.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Richard Suttmeier is the chief market strategist at AlphaPlus Analytics in addition to ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.
Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.
Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.
Click here for details on Suttmeier's "Buy and Trade" investment strategy.
Richard Suttmeier can be reached at RSuttmeier@Gmail.com