Zacks Industry Rank Analysis Highlights: Healthsouth and Chemed
Zacks Industry Rank Analysis is written by John Blank, PhD, Chief Equity Strategist, Zacks.com.
Healthcare Stocks: It Pays to Get Older
Q2 earnings season is over. And only one S&P 500 sector consistently delivered shareholder returns: health care.
The health theme floated Medical Outpatient stocks into view. This is a Baby Boomer industry. Its revenue charts seem to replicate the aches and pains they're accumulating as they age. As stocks look for direction, why not fall back on a tried and tested theme like health?
Reflecting this, the Medical Outpatient - Health Maintenance Industry climbed +1 position this week to sit at a very high Zack's Industry Rank of #7 out of 265 industries. This 16 company industry demonstrated 50 positive earnings estimate revisions compared to 7 negative revisions, with an average positive earnings per share (EPS) surprise of +37%.
Seattle surgeon Mary Lee Peters MD had this to say --
"Those born between 1946 and 1964 constitute 28% of the U.S. population. 76 million Boomers will hit 65 over the next two decades, at a rate of 10,000 a day. Boomers account for half of all consumer spending.
"The typical Boomer feels 9 years younger than their chronological age, according to Pew Research Council data. Elective cosmetic surgery is up +65% in this age group since 2005. Non-invasive plastic surgery procedures are up +87% in the same time period.
"What is contributing to the upsurge in plastic surgery in this demographic?
"Boomers have chosen to redefine what it means to age. They are re-inventing themselves. Sixty is their new forty. They pay more attention to health, diet, exercise and general sense of well-being. They are not afraid to spend money on improving quality of life. They expect the quality of the last third of their life to be high.
"For U.S. women, life expectancy has lengthened 34 years over the last fifty years. But the focus for Boomers is not so much on life span as it is getting to the end of their health span in better shape. They are working longer than anticipated. Older workers want to look better to fit in with younger co-workers. Boomers want to stay active, relevant and engaged with society in important ways. Their outlook on life is to do what they can to enjoy the years they have left."
Two following corporations have been upgraded this week to a Zacks Rank #1 (Strong Buy). An upward lift in rank from a Buy or Hold to a Strong Buy signals a given stock may be on a path higher following future positive earnings estimate revisions.
Research the four Zacks Rank factors when devising your investment strategy. It can add understanding, both to fundamentals underpinning company strategy and industry trends affecting similar businesses. Medical Outpatient operators have been revised upward by our system. Both stocks also hold a long-term Zacks Outperform rating.
Pablo Picasso once said, "It takes a long time to become young."
HLS holds a short-term Zacks Rank #1 rating. The company beat consensus by +13% in its most recent earnings report. Consensus pegs EPS growth in 2014 at +14% and 2015 at +8%. Revenue growth is +5% in each year.
HLS is one of the nation's largest providers of outpatient surgery and rehabilitation healthcare services. The company provides these services through its national network of inpatient and outpatient healthcare facilities, including inpatient and outpatient rehabilitation facilities, outpatient surgery centers, diagnostic centers, occupational medicine centers, and other healthcare facilities.
HLS is classified as a mid-cap growth stock. Its next EPS report date is October 27th.
CHE holds a short-term Zacks Rank #1 rating. The company beat consensus by +11% in its most recent earnings report. Consensus sees no EPS growth in 2014 to be followed by +8% in 2015. Revenue growth is 2% and 4% respectively.
CHE is the nation's largest provider of end-of-life hospice services through it VITAS Healthcare Corp. subsidiary. Chemed also maintains a presence in the residential and commercial repair-and-maintenance industry through two subsidiaries. Roto-rooter is North America's largest provider of plumbing and drain cleaning services. Service America Network Inc. provides major appliance and heating/air conditioning repair, maintenance and replacement services.
Chemed is classified as a mid-cap growth stock. Its next EPS report date is also October 27th.
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