How to Invest During the 'Obamacare' Transition

NEW YORK (TheStreet) -- Which investments could and should prosper no matter what the outcome of the debate and potential revisions to the health care reform laws occur?

It's easy to get distracted. The U.S. is facing a government shutdown while politicians on both sides of the aisle use health care reform, aka "Obamacare," as a political hockey puck.

No doubt, there are many aspects of Obamacare that could merit reconsideration, and this may or may not happen. Meanwhile, investing decisions need to be made.

In developing an "Obamacare Transition" investment thesis, consider several key components.

First, any investment (this holds true at all times, in my view), must have a reasonable valuation. Second, the investment should have strong growth prospects. Third, the stock should be poised to benefit from the overall economic and demographic trends that are occurring. The latter is particularly important here as demographic trends are predictable and, most importantly, cannot be altered by political views or objectives.

It's only after an investment makes those three cuts that Obamacare should factor in.

Sectors To Avoid

In my opinion, most investors would be wise to avoid stocks in the following sectors -- large franchises, engineering and technology -- until there is more clarity in the law. Why? One of the provisions is that any employee working more than 30 hours would be considered full-time for purposes of qualifying under the law. Since most franchises own several stores and have over 50 employees, the costs could be harmful. This group would include Dunkin' Brands (DNKN) and McDonald's (MCD).

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