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5 'Very Cheap' Buy Ideas

March 04, 2012 | About:
The market trend in 2012 is said to undergo a revamping process, with a simultaneous change to be seen in market leadership patterns. The market leadership will be shifting towards the sectors like healthcare, and energy, amongst the few others. In which case, all the undervalued and beaten up stocks in the healthcare sector will depict an above-average performance, so as to regain its previous losses. The investors should thus focus on buying certain high-quality and reliable stocks from the healthcare sector, which would experience a positive impact from the upswing in the healthcare sector. By considering the earnings, dividend growth potential and future prospects of certain healthcare companies, investors should make a careful selection of their stocks within the sector. The healthcare sector consists of companies with varied functionalities. Likewise, the sector comprises of companies which cater to specialized pharmaceuticals, companies which cater to generic needs or over-the-counter product needs of the customers, companies which render retail support in pharmaceutical needs of its customers, and companies who provide precision in making of the medical equipments and supplies. The following are certain reliable companies in the healthcare sector, which could be invested in, at their current levels, with a medium to long term perspective.

Perrigo Company (PRGO) is one of the prominent healthcare companies catering to the generic, over-the -counter segments in its manufacturing and distribution of pharmaceutical products. Currently, Perrigo Company is trading at around $94.73, within its 52-week highs and lows of $104.70 and $71.54. With earnings per share of around $3.67 and price earnings of around $25.80, Perrigo Company has a market capitalization of around $8.84 billion. The company's hold lies in its over-the-counter market for manufacturing and marketing brand versions of Prilosec, and Nicorette gum. The company has a very strong network of distribution in order to reach its customers. An approximate increase of 10% to 20% in the company's earnings per share has been estimated by the management. In my opinion, Perrigo Company can trade in approximate multiples of 20 times its price earnings in 2013. I would recommend purchasing Perrigo Company at its current market price, as a medium to long term investment.

CVS Caremark Corporation (CVS) is one of the largest pharmacy service providers in the U.S. The current market price of the stock is around $42.70, with market capitalization of around $54.86 billion. CVS Caremark Corporation is bigger than Walgreens, which is its closest competitor. Also, its quarterly revenue growth is 12.50%, twice that of Walgreen's 4.70%. The stock's price to sales ratio is around $0.53. In 2011, CVS Caremark Corporation has grown above 22.78%. The company's 'pharmacy benefit management' segment show great potential of growth due to its contract with Aetna. A positive market outlook for the healthcare as well as the retail sector should certainly garner momentum in CVS Caremark Corporation. In my opinion, CVS Caremark Corporation can be bought at its current market price, with a medium to long term perspective.

Cardinal Health, Inc. (CAH) is one of the prominent distributors of medical supplies and pharmaceutical products. The current market rate of Cardinal Health, Inc. is around $42.06, ranging between its 52wk high of 47.06 and 52wk low of 37.53. With an earnings per share of around $2.70, and its price earnings is poised at around $15.60, Cardinal Health, Inc. has a market capitalization of around $14.54 billion. The company depicts a descent dividend yield of approximately 2.1%, wherein the company has paid consistently for the last ten years, a total of $3.72 for every share in dividends. Since 2011, its stock has risen by approximately 4%. Cardinal Health, Inc. has a strong cash reserves, and its cost structure is appropriately allocated. Currently, the company's stock is valued at approximately 16 times multiples of its price earnings. In my opinion, Cardinal Health, Inc. could be purchased at the current market price, with a medium to long term perspective.

Mettler-Toledo International (MTD) is a prominent company in the healthcare sector catering to every arena of medical instruments and supplies. The stock is currently trading at around $180.50, within its 52-week range of $193.56 and $126.10. With its price earnings at approximately 22, earnings per share at around $8.21, Mettler-Toledo International has a market capitalization of around $5.7 billion. The company has well diversified line of products catering to the marketing, manufacturing, and distribution of medical supplies as well as precision equipments. Mettler-Toledo International has implemented various plans to enhance its operational regions of distribution as well as improve its operational work-flows. With the expected positive momentum in the healthcare sector in 2012, I expect Mettler-Toledo International to perform even better in 2012, in tandem with the market trend. Moreover, the company is complemented with sound historical trends. In my opinion, its stock can be purchased at its current level, with a long term perspective.

Allscripts Healthcare Solutions Inc. (MDRX) , as the name suggests, provides complete healthcare solutions to the physicians and healthcare providers all across the U.S. Currently trading at around $21.06, within its 52-week highs and lows of $23.13 and $13.85 respectively, the company has market capitalization of around $4 billion. The company will certainly be benefited by the implementation of the HITECH Act stimulus. Moreover, Allscripts Healthcare Solutions Inc. will be able to perform better through expansion in electronic health record and practice management, due to its mergers with Eclipsys and Misys. Especially with the most recent Eclipsys merger, Allscripts Healthcare Solutions Inc. can render its ambulatory systems in all Eclipsys' hospital inpatient systems, so as to garner a wider customer base. In my opinion, Allscripts Healthcare Solutions Inc. is currently trading at a discount. So as to say, the stock remains undervalued at its current market price. Therefore, one can purchase this stock at its current market price, with a medium to long term perspective.

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