UnitedHealth Group (NYSE: UNH) shares look cheap. With a price-to-earnings ratio of 9.6, and shares trading at 1.5 times book value, now seems like a good time to buy UnitedHealth. And thanks to the new health-care law, 32 million additional people will soon be able to obtain health insurance, a potential boon for insurers such as UnitedHealth.

Then again, Warren Buffett recently sold his entire UnitedHealth position, as well as all his holdings in health-care company WellPoint (NYSE: WLP). Buffett also reduced his position in Johnson & Johnson (NYSE: JNJ), suggesting that the Oracle of Omaha doesn't consider the health-care bill a surefire win for investors, even when stocks like UnitedHealth look like tantalizing bargains.

If you're more bullish on the health-care sector than Buffett, should you buy UnitedHealth? Or are there other health-care companies in a better position to put money into your pocket?

We asked our Motley Fool CAPS community to nominate two Healthcare Providers & Services peers that are likely to outperform UnitedHealth Group.

And the nominees are ...
Our 165,000-plus-member CAPS community considers McKesson (NYSE: MCK) a better opportunity among similarly sized companies in UnitedHealth's sector. McKesson is a five-star stock (the highest rating given by our CAPS community), while UnitedHealth is a four-star stock. CAPS member MagicDiligence makes the case that McKesson has a strong competitive position and growth story. Here's an excerpt from an excellent pitch written at the end of last year:

The main driver here will be the Technology Solutions arm, which has generally been growing faster than Distribution and carries significantly higher gross margins (46.4% vs. 3.8%, respectively). The federal government has focused on reducing health care costs, and the expanded use of information technology to improve the efficiency of data management will benefit McKesson. ...

The firm also has a very strong competitive position. McKesson is one of only 3 major pharmaceutical distributors, the other two being Cardinal Health (NYSE: CAH) and AmerisourceBergen (ABC). Operating margins are very low in this business (barely over 1%), making economies of scale a major roadblock to new competitors. It is unlikely that the existing oligarchy will be broken any time soon. The Technology business benefits from high switching costs. Once a hospital or practice integrates McKesson's software, it is time consuming and costly to switch to a competitor, unless there are significant reasons to do so. Competitive position is strong and durable.

MagicDiligence also points out that 26% of McKesson sales come from two customers: CVS Caremark (NYSE: CVS) and Rite Aid. Rite Aid hasn't reported a profit since the year ended March 2007, so investors evaluating McKesson should factor in the risk that such a large part of its distribution revenue might be in trouble.

Now, if you're looking for a micro cap that may grow up to become the next Healthcare Provider & Services superpower, the CAPS community suggests Prospect Medical Holdings (Nasdaq: PZZ). Recently added to the Russell 2000 Index, Prospect has an attractive gross margin of 25.2% -- on par with UnitedHealth-- and insider ownership of 56.7%, much higher than UnitedHealth's 0.6%. We especially like to see insider ownership, since it aligns management with outside shareholders.

Make your vote count!
Do you agree that McKesson or Prospect Medical may be better buys than UnitedHealth? Click over to CAPS, and let the rest of the community know what you think.