Obamacare Stocks: Could Biotech Help You Capture Gains?

A portfolio could be built to help capture healthcare gains. Check out these possible winning Obamacare stocks. 

The Affordable Care Act, better known as Obamacare, has hit a few speed bumps since launching at the beginning of October. The landmark healthcare legislation's key provision - the insurance exchanges - were set to be up and running on October 1. 

Read more from Kapitall: Invest in Affordable Care? 3 Rallying Generic Drug Stocks to Consider

The day came and went with disappointment as technical issues showed that the system was not ready for such a significant task. Reports have recently been released that the system is still struggling to allow consumers to register for coverage. 

These exchanges are vital to the success of the legislation. Despite the setbacks so far, are there some possible Obamacare stocks to choose from?

Healthcare expenditures are expected to reach about 20% of our GDP by 2022. Aspects like changing demographics means healthcare sectors like biotech could end up being a huge benefit to any portfolio. 

Investing ideas

We came up with the list below by screening the healthcare sector for the following:

Low POP (Kapitall-speak for the forward price to earnings ratio or P/E). Return on investment (ROI) over 10%. Positive return on assets (ROA). Share price trading above both its 50-day and 200-day moving averages

China Biologic Products Inc (CBPO) is a low-flier in the biotech industry. A market cap of about $766 million makes it tiny in comparison to giants like Amgen, but with gains of 75% year-to-date. The company has had some impressive top and bottom line gains recently.

China Biologic's chart is looking nice with momentum approaching the apex of an ascending triangle pattern. Earnings are out November 5, but with China recently having had some economic downturns the industry could face some struggles if the local economy turns for the worse.

Click on the interactive chart below to see data over time. 

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If POP is something driving your investment strategy,PDL BioPharma Inc (PDLI) is a looker. Posing a POP of 5 puts it on top of our screen for the metric. Another attractive aspect of this stock is it's 7.4% dividend yield though, as the saying goes, all that glitters is not gold. PDL BioPharma makes its revenue from royalties.

The problem is that most of these royalties expire in December 2014. Short term growth might very well be possible but investors need to be vigilant for negative news. PDL BioPharma will be announcing earnings on November 6.

Read more about other Biotech stocks here: Can 7 Cash-Rich Biotech Stocks Boost Your Health, and Your Portfolio?

Meanwhile Questcor Pharmaceuticals Inc (QCOR) is making even the S&P 500 look like a lagger. It's a tricky choice for investors since some analyst have upgraded the stock while others have downgraded it. Although the past 52 weeks have been outstanding for Questcor, the recent weeks have begun to look troubling.

In September the company announced an investigation by the US Justice Department and the SEC. Bears have piled on and the stock's graph started looking a little uglier. The company is growing but investigations rarely bode well for biotechs in the short run. 

Jazz Pharmaceuticals Inc (JAZZ)  is one company that has been on a tear over the course of this year, up over 70%. Some still feel the company is undervalued even with such a rally already taking place.

Acquisitions earlier this year have made the company well diversified and its strong balance sheet is a definite draw for investors. Sales of their flagship product Xyrem have been good in recent reports but competition from generic competitors still lingers as a concern for investors. Jazz will be announcing third quarter earnings on November 5.

A full diagnostic of a healthcare portfolio should probably include Amgen Inc (AMGN). The company recently reported strong earnings but possibly more exciting is the recent acquisition of a Chinese cancer drug manufacturer. Investors should tread lightly since the stock is tradingnearall-time highs and it's balance sheet a little weak in cash.

Click on the interactive chart to see data over time. 

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Do you think these Obamacare stocks could help you capture gains in healthcare? Use the interactive list below to begin you own analysis.

 

1. China Biologic Products Inc. (CBPO, Earnings, Analysts, Financials): Engages in the research, development, manufacturing, and sale of plasma-based pharmaceutical products. Market cap at $768.8M, most recent closing price at $28.60.

2. PDL BioPharma, Inc. (PDLI, Earnings, Analysts, Financials): Engages in the management of antibody humanization patents and royalty assets, which consist of Queen et al. Market cap at $1.17B, most recent closing price at $8.36.

3. Questcor Pharmaceuticals, Inc. (QCOR, Earnings, Analysts, Financials): Provides prescription drugs for central nervous system and inflammatory disorders. Market cap at $4.04B, most recent closing price at $68.56.

4. Jazz Pharmaceuticals (JAZZ, Earnings, Analysts, Financials): Develops and commercializes products for neurology and psychiatry primarily in the United States. Market cap at $5.55B, most recent closing price at $94.53.

5. Amgen Inc. (AMGN, Earnings, Analysts, Financials): Develops, manufactures, and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses primarily in the United States, Europe, and Canada. Market cap at $87.38B, most recent closing price at $116.20.

 

(List compiled by Antonio Alfonso. Analysts ratings sourced from Zacks Investment Research, all other data sourced from Finviz. Original article published on 10/31/13.)

Analyze These Ideas: Getting Started

Read descriptions for all companies mentioned Access a performance overview for all stocks in the list Compare analyst ratings for the companies mentioned Compare analyst ratings to annual returns for stocks mentioned Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)

Dig Deeper: Access Company Snapshots, Charts, Filings

China Biologic Products Inc. (CBPO, Chart, Download SEC Filings) PDL BioPharma, Inc. (PDLI, Chart, Download SEC Filings) Questcor Pharmaceuticals, Inc. (QCOR, Chart, Download SEC Filings) Jazz Pharmaceuticals (JAZZ, Chart, Download SEC Filings) Amgen Inc. (AMGN, Chart, Download SEC Filings)

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