On July 9 I wrote Obamacare Delay Is Good for Health Stocks and since then the seven stocks I profiled moved sideways to up with gains between 2.4% and 25.7%.
Registrations began Tuesday the health care exchanges which take effect in January 2014. Folks who are already covered under existing health plans should be able to keep their current plans, as long as the employers keep plans in place, which is no sure thing. Many companies have chosen to convert full time employees to part time by cutting hours worked to 29 hours. These employees must eventually register on the health care exchanges.
ValuEngine shows that the medical industry is 23.5% overvalued with the health maintenance industry 21.2% overvalued. I continue to give the medical sector an equal-weight asset allocation rating.
On July 8 there was only one buy rated stock among the seven health maintenance organizations I chose to profile for buy-and-trade investors. Today two other stocks among these seven have buy ratings. All are overvalued by 6.1% to 40.6% and have posted solid gains of 27.8% to 76.7% over the last 12 months. All are above their 200-day SMAs, which reflects the risk of reversion to the mean.
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 ($64.76 vs. $63.26 on July 8): set a new multi-year high at $69.19 on Sept. 16. The stock had a hold rating in July and now has a buy rating. My annual value level is $62.77 and a quarterly pivot at $65.82 and monthly risky level at $70.72.
Centene ($64.30 vs. $54.49 on July 8): tested and held its 50-day SMA at $57.46 on Sept. 23 then traded to a new multi-year high at $65.05 on Oct. 1. My monthly value level is $63.01 with a quarterly pivot at $65.01.
Health Net ($32.87 vs. $32.07 on July 8): set a new multi-year high at $33.90 on Sept. 16. My weekly value level is $31.23 with an annual pivot at $32.54 and annual risky level at $35.35.
Humana ($94.87 vs. $84.27 on July 8): set a new multi-year high at $99.85 on Sept. 16. Humana has maintained a buy rating since July 8. My annual value level is $91.58 with a weekly risky level at $98.67.
UnitedHealth Group ($72.57 vs. $67.56 on July 8): set a new multi-year high at $75.88 on Sept. 16. My annual value level is $62.39 with a semiannual pivot at $73.01 with a monthly risky level at $75.13.
WellCare Health Plans ($72.71 vs. $57.86 on July 8): set a new multi-year high at $73.02 on Oct. 2. My annual value level is $69.44 with a semiannual pivot at $72.05 and quarterly risky level at $81.04.
Wellpoint ($86.60 vs. $83.09 on July 8): set a multi-year high at $90.00 on July 24, which was nearly retested on $89.93 on Sept. 16. Wellpoint was rated hold back on July 8 and today has a buy rating. My semiannual value level is $83.77 with a weekly pivot at $85.43 and monthly risky level at $90.30.
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.