A trio of health care stock picks

When analyzing the market for value opportunities, one method is to select stocks with low 12-month price-to-12-month free cash flow ratios compared to that of the S&P 500 index, which currently hovers around from 13.18.

So, investors may want to consider the following stocks because they meet the above criteria and are recommended by selling analysts on Wall Street.

Cigna

The first stock to consider is Cigna Corp. (NYSE: CI), a health care plans company based in Bloomfield, Connecticut.

Cigna’s price-to-free cash flow ratio is 9.92 as of April 16, ranking above 53% of the 19 companies that operate in the healthcare plans industry.

Free cash flow per share for the 12 months ended December was $ 25.47, up 13% over the past year.

Thanks to a 33.85% increase over the past year, the stock traded at $ 252.57 per share at the close on Friday for a market cap of $ 87.74 billion and a range of 52 weeks from $ 158.84 to $ 255.89.

Currently, the company pays quarterly dividends to its shareholders, with the most recent payment of $ 1 per common share being made on March 25. The payment generates a forward dividend yield of 1.58% as of Friday.

GuruFocus gave a score of 5 out of 10 for the financial strength of the company and 7 out of 10 for its profitability.

On Wall Street, the stock has a median buy recommendation rating with an average target price of $ 268.39 per share.

Humana

The second that equity investors might want to consider is Humana Inc. (NYSE: HUM), a healthcare plans company based in Louisville, Kentucky.

Humana’s price-to-free cash flow ratio is 12.39 as of April 16, ranking above 58% of the 19 companies operating in the healthcare plan industry.

The company’s free cash flow per share for the last 12 months ended December was $ 35.13. Free cash flow increased 4.10% over the past year.

Due to an 18.5% increase over the past year, the stock traded at $ 435.28 per share at the close on Friday for a market cap of $ 56.16 billion and a 52-week range of $ 301.29 to $ 474.7.

Currently, the company pays quarterly dividends to its shareholders, with the next payment of 70 cents per common share due to be issued on April 30. The payment produces a forward dividend yield of 0.64% effective April 16.

GuruFocus gave a score of 6 out of 10 for the financial strength of the company and 8 out of 10 for its profitability.

On Wall Street, the stock has a median overweight recommendation rating with an average target price of $ 476.55 per share.

Corp of America Laboratory

The third stock to consider is Laboratory Corp of America Holdings (NYSE: LH), an independent clinical laboratory company based in Burlington, North Carolina.

LabCorp’s price-to-free cash flow ratio is 14.66 as of April 16, ranking above 80% of the 111 companies operating in medical diagnostics and research.

The company’s free cash flow per share for the past 12 months ended December was 17.88 cents. Free cash flow has increased by 68.90% over the past year.

Due to an 80.07% increase over the past year, the stock was trading at $ 262.2 per share at the close on Friday for a market cap of $ 25.60 billion and a range of 52. weeks from $ 119.04 to $ 263.08.

The company does not currently pay dividends.

GuruFocus gave a score of 5 out of 10 for the financial strength of the company and 9 out of 10 for its profitability.

On Wall Street, the stock has a median buy recommendation rating with an average target price of $ 273.36 per share.

Disclosure: I have no position on the titles mentioned.

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About the Author:

Alberto Abaterusso

I am a contributor at GuruFocus. I mainly write about how to pick potential value stocks. The gold, silver and precious metals mining industries are also my cup of tea. My articles have also been widely linked from popular sites including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters, and others. I have a Master \\\\\\\\\\\\\\\\ \\\\\\\\\\\\ \\\\ ‘I am based in the Netherlands.

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