Only one S&P 500 sector consistently delivered shareholder returns during the second quarter earnings season: healthcare.
Q2 earnings season is over, and only one S&P 500 sector consistently delivered shareholder returns: healthcare.
The health theme floated stocks for Medical Outpatient, a baby boomer industry, into view. Its revenue charts seem to replicate the aches and pains boomers are accumulating as they age. As stocks look for direction, why not fall back on a tried and tested theme like health?
This 16-company industry demonstrated 50 positive earnings estimate revisions compared to 7 negative revisions, with an average positive earnings-per-share (EPS) surprise of plus 37%.
Seattle surgeon Mary Lee Peters, MD, had this to say:
“Those born between 1946 and 1964 constitute 28% of the U.S. population. 76 million Boomers will hit 65 over the next two decades, at a rate of 10,000 a day. Boomers account for half of all consumer spending.
"The typical Boomer feels 9 years younger than their chronological age, according to Pew Research Council data. Elective cosmetic surgery is up +65% in this age group since 2005. Non-invasive plastic surgery procedures are up +87% in the same time period.
"What is contributing to the upsurge in plastic surgery in this demographic?
"Boomers have chosen to redefine what it means to age. They are re-inventing themselves. Sixty is their new forty. They pay more attention to health, diet, exercise and general sense of well-being. They are not afraid to spend money on improving quality of life. They expect the quality of the last third of their life to be high.
"For U.S. women, life expectancy has lengthened 34 years over the last fifty years. But the focus for Boomers is not so much on life span as it is getting to the end of their health span in better shape. They are working longer than anticipated. Older workers want to look better to fit in with younger co-workers. Boomers want to stay active, relevant and engaged with society in important ways. Their outlook on life is to do what they can to enjoy the years they have left.”
The following 2 corporations have been upgraded this week to strong buys. An upward lift in rank from a buy or hold to a strong buy signals a given stock may be on a path higher following future positive earnings estimate revisions.
Pablo Picasso once said, “It takes a long time to become young.”
Healthsouth Corp (HLS)
The company beat consensus by 13% in its most recent earnings report. Consensus pegs EPS growth in 2014 at 14% and 2015 at 8%. Revenue growth is expected to be up 5% in each year.
HLS is one of the nation’s largest providers of outpatient surgery and rehabilitation healthcare services. The company provides these services through its national network of inpatient and outpatient healthcare facilities, including inpatient and outpatient rehabilitation facilities, outpatient surgery centers, diagnostic centers, occupational medicine centers, and other healthcare facilities.
HLS is classified as a mid-cap growth stock. Its next EPS report date is Oct. 27.
Chemed Corp. (CHE)
The company beat consensus by 11% in its most recent earnings report. Consensus sees no EPS growth in 2014 to be followed by an 8% growth in 2015. Revenue growth is 2% and 4%, respectively.
CHE is the nation’s largest provider of end-of-life hospice services through it VITAS Healthcare Corp. subsidiary. Chemed also maintains a presence in the residential and commercial repair-and-maintenance industry through two subsidiaries. Roto-rooter is North America’s largest provider of plumbing and drain cleaning services. Service America Network Inc. provides major appliance and heating/air conditioning repair, maintenance and replacement services.
Chemed is classified as a mid-cap growth stock. Its next EPS report date is also Oct. 27.
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