The Obamacare Stock Surge

The Affordable Care Act, commonly known as Obamacare, has been off to a shaky start, to say the least. Unresponsive websites, a government shutdown, bickering politicians, and finger-pointing have tarnished the president's signature legislation. Problems aside, the new public exchange is an opportunity for long-term growth: The ACA adds 30 million Americans to insurance rolls. Healthcare stocks have great potential to grow over the next two to five years as consumers use the exchanges -- that is, when the website gets fixed.

While the techies tinker with Healthcare.gov, health insurance stocks have surged. The five major health insurance companies -- WellPoint, UnitedHealth Group, Aetna, Cigna and Humana -- have increased more than 30% in 2013. The ACA has been good so far to these shares. Other companies within health care are poised to profit even more as a result of the ACA roll-out. Let's talk about three potential big winners now that the ACA is a reality.

Lannett  (NYSE: LCI  )  has been very efficient developing and manufacturing generic pharmaceuticals. Lannett's sales are up 13% this year. As millions are active in the health care exchanges, generic drugs will become even more popular. The Congressional Budget Office estimates that Americans save $8 billion to $10 billion a year using generic drugs.Lannett has shown to be effective in dealing with government regulators -- something that many companies (JPMorgan Chase) have trouble doing. It completed an important step by successfully submitting an Abbreviated New Drug Application of Thalidomide capsules.

Thalidomide is controversial, but Lannett has developed the capsules to treat blood cancer. Many still remember Thalidomide as the cure-all drug for morning sickness that inadvertently caused infants to be born with deformities such as phocomelia. Thalidomide capsule sales topped $66 million in the second quarter of 2013, and Lannett wants to add a generic and safe product to meet demand. This stock -- just above $20 per share -- has a high P/E of 51, but as frugal consumers look to save money any and everywhere they can, generic drugs seem to be a compromise many seem willing to make.

AmerisourceBergen (NYSE: ABC  )  has a great program called Good Neighbor Pharmacy, which has received the top ranking in the J.D. Power National Pharmacy Study for 2013. This program won the award in 2010 and tied for the top ranking in 2011. The study surveys actual customers to measure customer satisfaction for both mail-order and brick-and-mortar pharmacies. AmerisourceBergen is on track to have double-digit sales through 2014. The ACA will only add to their sales since more Americans will have health care, presumably filling lots of prescriptions.

Not only has AmerisourceBergen mastered pharmacy retail; the company has been busy restructuring the business. AmerisourceBergen has approved a quarterly dividend increase ($0.21 per share), repurchased $401 million in common stock, and approved $750 million in more buybacks. AmerisourceBergen has a strong retail position, 3,400 award-winning Good Neighbor Pharmacy stores,  and seems genuinely committed to investor earnings.

Universal Health Services (NYSE: UHS  ) has aggressively attacked a grown concern in America: diabetes. The company is currently developing specialty services to treat type 1 diabetes and mental health. Universal Health Services provides expert home, hospice and personal assistance care. They specialize in providing nurses who are skilled in diabetes and disease management. 

As those continue to be issues Americans deal with, Universal Health Services will increasingly be the health care solution many turn to. Not only has Universal Health Services created products and services that are timely and effective, the company has also made some shrewd investments -- such as the $190 million electronic health records implementation for the firms acute care hospitals -- that are ripe for profits.

Universal Health Services has successfully integrated Ascend Health, which it acquired in 2012. Universal Health Services has also agreed to pay a dividend of $0.05 per share. This company has all of the bases covered -- great M&A, timely and effective services, health centers, surgical hospitals -- and the ACA is the icing on the cake. Universal Health Services is uniquely positioned to grow because of the ACA. The company has more reach than drugmakers and hospitals because they provide much-needed services in consumers' homes. Universal Health Services can effectively compete against large regional hospitals via its 226 ambulatory surgery centers, behavioral health facilities, and acute care hospitals.

Don't let fear come between you and profits. The ACA is new, and is much maligned, but it is the law. Capitalize on it. Don't hate -- profit.

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