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 Medicaid-related health-care plan provider Molina Healthcare
So what: Before you get too excited, understand that today's 31% rise follows yesterday's 31% tumble after Molina warned that higher costs in Texas would cause it to potentially lose money in the state, and forced it to rescind its earnings guidance. Today's news out of Ohio adds some wind back into shareholders' sails as Ohio chose to reverse its original decision and give its Medicaid managed health-care business to both Molina and Centene
Now what: Today's news is good because it will drive new business, but it could prove to be a moot point if Molina is paying out more in medical costs than it's bringing in with its premiums. Molina is a cash-rich company that has historically traded at a lower valuation than its peers mainly because of its targeting of lower-income (and thus, lower-margin) families, so it does have an attractive valuation on its side. However, until Molina solidifies its near-term picture and guidance, I wouldn't be brave enough to go near the stock.
Craving more input? Start by adding Molina Healthcare to your free and personalized watchlist so you can keep up on the latest news with the company.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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