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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (35163)	8/19/2009 11:51:04 AM
From: Paul Senior	1 Recommendation Read Replies (1) \| Respond to of 78688

Healthcare stocks: I looked at HRC again yesterday and at Stryker. I wrote this last night, but lost my energy to complete my ideas: ======================= ======================= ======================= Reviewing HRC yet again, I still find it too expensive for me. It's led me to two others though. I'm holding many health care stocks. Most are small positions. Some of them I might benefit from if, instead of looking for new opportunities (new stocks), I just upped my positions in those that I already have. For a number of reasons-- one being the health care sector is so broad, it may not be conceptually correct or even practical to try to use the same metrics to value all these companies. Nevertheless I AM using estimated forward p/e multiples as a vector to direct my investing funds. I understand that analysts are not to be relied on, that even consensus earnings estimates, not only don't hit their mark many times, but sometimes even fail to get the direction right. (Analyst estimates usually/always being bullish) For me, I've just arbitrarily decided that in this funk economy with confusing political agendas regarding health care, and with health care not really participating in the recent stock rally to the extent that other sectors have, that I am not willing to buy any health care company that has a forward p/e of 15 or more. For me there's no reason to step up. There are so many with lower p/e’s. Of the many health care positions I hold for which Yahoo shows analyst estimates, I have: 3 with forward p/e 17+ (HAE, CAH) 1 with p/e 15-16 (BEC) 0 with p/e 14 6 with p/e 12-13 (JNJ, COV, BLUD, BAX, BDX, VAR) 4 with p/e 10-11 (ABT, LTC, MCK, AMG) 4 with p/e 8-9 (AZN, GSK, BMY, UNH) 7 with p/e less than 8 -------------- I have come across two more that I now find interesting because their forward p/e is in 10-11 area: ZMH: current p/e=12.5; forward p/e 10.5 SYK: current p/e=14.3; forward p/e about 11.5 adjusted. (SYK has no ltd and about $6/sh in cash. I subtract that cash/sh from the stock price of $39.77 and use analysts' consensus earnings estimate of $2.94 (I am just not bothering to take out the income on $6/sh that might be included in $2.94 ) to get adjusted estimated p/e of 11.5) Stryker has had a great history. I believe it's the market leader in its segment (competitors being JNJ and ZMH). ======================= ======================= ======================= I find the persistent insider selling by a Styker family member to be somewhat disconcerting. I did decide though that I would add a few shares of Zimmer to my holdings. I bought an exploratory position near market close on Tue., with the intent to add if shares continue to fall. finance.yahoo.com