My Top Stock for the Coming Healthcare Boom

As the country moves forward in providing medical coverage for all Americans, the healthcare sector will be one of the top growth areas for investment opportunity going forward.

As I recently discussed in these pages, there are ways investors can benefit from Obamacare, whether you believe in the new healthcare strategy or not. The reality is that there will be tens of millions of Americans added to the list of those needing healthcare solutions, and that will definitely provide an investment opportunity and a catalyst for growth in the sector.

What I believe is that there will be a tremendous investment opportunity for investors over the next few decades, as the Baby Boomers, Generation Jonesers, and early Generation Xers move into retirement and the demand for healthcare solutions accelerates across the country.

We will see an investment opportunity among the providers of health plans, along with the pharmaceutical and medical device makers that will market to a much larger user base.

Besides the rising demand for drugs as America increases its health coverage and its citizens age, I also expect a significant increase in the demand for medical devices. Today, you can already get replacements for hips and knees, along with other extremities. I expect the range of products and demand to continue to rise as American seniors grow older and research and technology advance.

There are numerous medical device companies that could benefit from the shifting healthcare space. An interesting contrarian investment opportunity on medical devices may be SurModics, Inc. (NASDAQ/SRDX), which has a share price of $21.25 and a market cap of $287 million.

SurModics develops a technology that helps coat the surface of medical devices, making them more effective. The coating technology is also used for the drug delivery process.

The company is struggling at this time, after having fallen short in its first-quarter earnings. Prior to this, SurModics beat consensus earnings-per-share (EPS) estimates in two straight quarters. Down to just above its 52-week low, I see a possible contrarian investment opportunity for speculators at the current price.

For SurModics, the company needs to prove to investors that it’s ready to deliver consistent results.

Fundamentally, SurModics reported declining fiscal revenues, falling in three straight years to fiscal 2012, prior to a rebound in fiscal 2013. The growth is expected to continue by 5.4% to $58.59 million in fiscal 2014, followed by 5.6% to $61.87 million in fiscal 2015, based on data from Thomson Financial.

The chart of SurModics shows the current breakdown and recent bounce off longer-term support at around $20.00. The stock could bounce back towards $26.00–$28.00, based on my technical analysis.

The bottom line is that SurModics is a good example of a contrarian investment opportunity that could provide some decent upside potential, especially as Obamacare comes on-stream.

This article My Top Stock for the Coming Healthcare Boom was originally published at Daily Gains Letter

** Investors Causing Massive Shifts in Growth Stocks

~ by Mohammad Zulfiqar, BA

You can’t deny it: there are outright signs of stress on the key stock indices. We see investors are worried, and they just don’t like risk. We see huge selling in the growth stocks, with names like Amazon.com, Inc. (NASDAQ/AMZN) and Twitter, Inc. (NYSE/TWTR); they are witnessing a huge sell-off and are now in bear market territory. The biotechnology sector is getting slammed—investors are hitting the bid and running for the exit.

With all this happening, one question comes to mind: what happens next? Growth stocks can act as a leading indicator of what’s next for the markets. Are key stock indices setting up for a huge market sell-off ahead?

Sadly, as this happens, we are hearing a significant increase in the noise. The bulls say this pullback should be used to get into the sold-off companies again. The bears argue that key stock indices are going to shed more gains. Beware; your portfolio might get hurt.

When it comes to investing for the long run, it is critical that investors try to minimize the noise and look at the long term.

With this said, over the past few years, the key stock indices have increased significantly. 2013 was another stellar year. Key stock indices like the S&P 500 increased more than 30%. Companies that are getting sold off—for example, Amazon.com—increased roughly 50%. The NASDAQ biotechnology sector that’s plunging lower now had increased by more than 85% in 2013.

Going forward, it doesn’t look like the year 2014 will be anything like 2013. I expect the key stock indices to move sideways—trading in a range. These ranges may break to the upside, but the move won’t be as huge. We are seeing evidence of this already. Key stock indices fail to break and run away. Look at the chart below and pay close attention to the circled area where we see this phenomenon occur.

For key stock indices to go higher, you need growth in corporate earnings and growing business optimism. As time passes, we are seeing significant evidence that the corporate earnings aren’t as robust. We see a large number of companies are buying back their shares—and this causes their corporate earnings per share to look better. They are not beating their revenue estimates. This tells us that they are not necessarily selling more, but that earnings are coming through other means.

As I have repeatedly said in these pages, your investment strategy in this type of market should be to raise cash by taking profits off the table. Remember: if you do follow this investment strategy, the worst-case scenario is profit. Investors should also keep in mind that there may be opportunities in the making right now in the growth stocks, but it may be too early to get in. Investors should start to track companies that have good prospects but are currently in the midst of a sell-off.

This article Investors Causing Massive Shifts in Growth Stocks

was originally published at Daily Gains Letter