Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, pharmacy benefit manager Medco Health Solutions (NYSE: MHS) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Medco's business and see what CAPS investors are saying about the stock right now.

Medco facts

Headquarters (Founded) Franklin Lakes, N.J. (1983)
Market Cap $27.1 billion
Industry Health-care services
Trailing-12-Month Revenue $64.28 billion
Management

Chairman/CEO David Snow Jr.

CFO Richard Rubino

Return on Equity (Average, Past 3 Years) 21%
Cash/Debt $947.4 million / $5.02 billion
Competitors

Aetna (NYSE: AET)

Humana (NYSE: HUM)

UnitedHealth (NYSE: UNH)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 97% of the 1,151 members who have rated Medco believe the stock will outperform the S&P 500 going forward. These bulls include gweech and All-Star awesomestockdude, who is ranked in the top 2% of our community.

Earlier this month, gweech touched on the tailwinds working in Medco's favor: "A ton of baby boomers in need of generics and a ton of patents up in the next few years. Medco is a well run company."

In fact, Medco's three-year average return on equity (21%) clearly tops that of listed rivals Aetna (15.9%), Humana (17.6%), and UnitedHealth (16.8%).

CAPS All-Star awesomestockdude expanded on the outperform case last October:

There are several other growth drivers for MHS that should help increase revenue, grow margins, and put the business into different and growing areas:

Generics
Generics provide lower revenue compared to brand-name drugs but have much higher margins, which means more earnings. ...

Specialty Pharmacy
This part of their business is still not that significant compared to the PBM, but should continue to grow as they expand by creating new services that reduce drug cost and are more convenient. ...


Pharmacogenomics
This sector is still very small, but over the years I can easily see the idea of "personalized drugs" being the next big thing. ...

Mail-Ordering
I bet over time as the baby boomers become older this service from MHS would seem extremely attractive, and we should see more customers come to MHS.

What do you think about Medco, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Medco and UnitedHealth are Motley Fool Stock Advisor picks. UnitedHealth is an Inside Value choice, and Motley Fool Options has recommended a diagonal call position on it. The Fool owns shares of UnitedHealth. Try any of our Foolish newsletter services free for 30 days.

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