Every trading day Torvanta ranks the 526 large-cap stocks its model portfolios choose from on valuation, growth, estimate revisions, price trend, news and risk. Each Sunday we pick one sector and show two names the model rates highly there: a Standout, one of the sector's larger companies, and a Hidden Gem, a smaller, less-covered company. This week: Health Care, where 7 of 60 S&P 500 companies rank in the model's top 100. This week's Hidden Gem - a smaller, less-covered company the model rates highly - is for subscribers.
One of the larger companies in Health Care (market value $50 billion).
Earnings momentum, with results beating expectations and analysts raising estimates — earnings expectations trending higher, last quarter's EPS beat the estimate by 9%, sales up 14% over the last 12 months and a strong price trend. Main risk: profitability is low (operating margin 2%). In the news: Yahoo Finance (Oct 12): Raymond James Upgrades Humana to Outperform From Market Perform, Price Target is $520. Next catalyst: earnings on Nov 6.
HUM: six months against its sector and the S&P 500
Why the model ranks it highly
Revenue growth of 14% over the past year, faster than 73% of the S&P 500
Analysts raised earnings estimates over the past month
A price trend stronger than 62% of the index (+4% over three months)
News coverage has been net positive over the past month
What to watch
Valued at 25.9x trailing earnings versus an industry median of 21.6x
Context
Last report (Jul 29): earnings beat estimates by 9% and the stock moved -6.0% around the report
The company, its rating, fair value and the full reasoning are for subscribers. Picks are shown here two weeks after publication, with how they have done since.
Valuation: the typical Health Care company trades at 26 times earnings against 24 for the typical S&P 500 company, roughly in line with the market.
Growth: median revenue growth is +7% over the past year against +8% for the market.
Momentum: the typical Health Care stock is +12.6% over three months against -0.3% for the typical S&P 500 stock.
Model view: Health Care is 12% of the stocks the model ranks but 7% of its top 100, so the model leans away from it right now.
See the model's Health Care leader and every other sector's
The model ranks 7 Health Care stocks in its top 100 right now. Subscribers Only Weekly names each sector's leader every Sunday, and subscribers see every one of them, and every other sector, re-ranked each trading day with the reasoning, plus the model portfolio's own trades.
Research only, not investment advice or a recommendation to buy or sell any security. Rankings change as data changes and can be wrong. Torvanta and its founder may hold positions in securities discussed. Past performance does not guarantee future results.