Don't let it get away!
Keep track of the stocks that matter to you.
Help yourself with the Fool's FREE and easy new watchlist service today.
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of home-health-care specialist Gentiva Health Services (Nasdaq: GTIV ) are nose-diving 16% today following reports that Congress has apparently reached a deal to avert the looming debt-ceiling crisis.
So what: The worry is that the outlined debt-reduction package is going to sack the health-care sector, including home-health-care providers. Social Security, Medicaid, and veterans' benefits are protected from automatic reductions, but companies that receive payments from Medicare could be facing a serious pinch later this year when payments would be scheduled to drop by 11%. Gentiva is one of those companies, along with myriad other health-care companies taking it on the chin today.
Now what: I don't feel it's ever too early to be skeptical about a stock, but short-sellers may be jumping the gun on a relatively well-run company. Again, we have a lot of unanswered questions as to exactly how much we might see in spending cutbacks for Medicare, but Gentiva's forward P/E of 5.6, and the fact that it now trades well below its book value, makes it an attractive company to watch. With larger rival Amedisys (Nasdaq: AMED ) also valued at just 8.3 times forward earnings, this could be a seriously undervalued sector.
Craving more input? Add Gentiva Health Services to your watchlist!