Lagging Obamacare Sign-Up Is a Giant Pain for HMOs

NEW YORK (TheStreet) -- The big news overflowing today is that only 106,000 Americans signed up for Obamacare during the first month of open enrollment. Only about 27,000 of those sign-ups came through the HealthCare.gov Web site. And now, some Congressional Democrats want to change the Affordable Care Act to allow folks with current plans and doctors to keep them. This is after many insurers have canceled policies to comply with the new law.

The malaise of uncertainty is disconcerting to Aetna ( AET), Humana ( HUM), WellPoint ( WLP) and other health care companies and their shareholders. No one can say now whether or not implementation of Obamacare will be delayed, but if it is, it's going to cost health maintenance companies money to re-establish canceled plans for perhaps another year.

On Oct. 24, I wrote Aetna, Humana, Other HMOs Slip on Web Site Glitches and since then two of the eight stocks declined by 9.8% and 12.0%. Only one performed well with a gain 9.5%. One of the stocks was downgraded to hold from buy according to www.ValuEngine.com.

The eight stocks in today's table are overvalued by 8.1% to 122.4%. All have gains over the last 12 months between 12.8% and 92.4%. Only one is below its 200-day simple moving average, which reflects the risk of reversion to the mean for the other seven stocks.

Reading the Table

OV/UN Valued: 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 1-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: 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: Price at which to enter a GTC limit order to sell on strength.

Aetna ( AET) ($63.88 vs $63.79 on Oct. 22) traded as low as $60.33 on Oct. 29 and is currently positioned just below its 50-day SMA at $64.34. Buy-and-trade investors could have bought Aetna at my semiannual value level at $60.96 on Oct. 29. My annual pivot is $62.77 with a quarterly risky level at $65.82.

Centene ( CNC) ($57.99 vs. $65.92 on Oct. 22) set a multi-year high at $67.84 on Oct. 22. Buy-and-trade investors could have sold this stock at my weekly risky level at $67.64 before the stock plunged 12% from the Oct. 22 close to the Nov. 13 close. My semiannual value level is $50.96 with a monthly risky level at $61.89.

CNO Financial Group ( CNO) ($16.47 vs. $15.04 on Oct. 22) set a new multi-year high at $16.47 on Wednesday. My quarterly value level is $15.50 with a monthly pivot at $16.06. This is the best performing stock over the last 12 months and since Oct. 22. CNO financial is the holding company for Bankers Life, Colonial Penn and Conseco Insurance. Of these, Bankers Life markets and distributes health and life insurance and annuities to the middle-income senior market, which is a major segment of Obamacare.

Health Net ( HNT) ($27.98 vs. $31.03 on Oct. 22) broke below its 200-day SMA at $30.15 on Thursday trading down to a day's low at $25.40. This stock was downgraded to hold from buy according to www.ValuEngine.com. My quarterly value level is $25.04 with a weekly pivot at $28.29 and annual risky level at $32.54.

Humana ( HUM) ($96.57 vs. $92.82 on Oct. 22) traded down to $90.19 on Oct. 21 then as high as $91.84 on Nov. 6. My annual value level is $91.58 and a monthly risky level at $102.71.

UnitedHealth Group ( UNH) ($71.01 vs. $68.86 on Oct. 22) traded as low as $66.72 on Oct. 28 and now is poised just below its 50-day SMA at $71.50. My weekly value level is $66.82 with a semiannual risky level at $73.01.

WellCare Health Plans ( WCG) ($67.47 vs. $70.00 on Oct. 22) traded down to a test of its 200-day SMA at $60.05 on Nov. 1 then rebounded to its 50-day SMA at $68.59. My quarterly value level is $60.56 with a weekly pivot at $67.04 with an annual risky level at $69.44.

WellPoint ( WLP) ($88.02 vs. $88.43 on Oct. 22) traded down to $83.13 on Oct. 24 then as high as $88.50 on Nov. 7 above its 50-day SMA at $86.40. Buy-and-trade investors could have bought this stock at my weekly and semiannual value levels at $85.96 and $83.77. Today my semiannual value level remains at $83.77 with a monthly risky level at $98.24.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary 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

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