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Obamacare's 3 Biggest Winners of 2013

By Keith Speights - Dec 28, 2013 at 1:35PM

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Think it's hard to find winners from Obamacare this year? Not at all. Here are 3 of the biggest beneficiaries from health reform.

A huge website fiasco. Disappointing enrollment numbers. Delay after delay.

You might think it would be hard to find winners from Obamacare over the past year. That's not the case at all, though. Several companies experienced tremendous gains in 2013 thanks in no small part to the Affordable Care Act, commonly known as Obamacare. Here are three of Obamacare's biggest winners.

1. eHealth (EHTH -4.24%)
For nearly seven months in 2013, shares of online health insurance company eHealth languished below the stock's starting point for the year. That quickly changed in late July, though. 

On July 31, eHealth announced that it entered into an agreement with the federal government to help enroll individuals in insurance plans approved for the Obamacare exchange used by 36 states. The deal allowed eHealth to access the federal electronic data hub, which helps determine an individual's eligibility for subsidies and calculate the subsidy amount, if applicable.

The news sent eHealth shares soaring -- and ultimately helped propel the stock to a year-to-date gain of nearly 70%. This impressive climb happened despite the fact that the promised access to the federal electronic data hub still hasn't really materialized. As of late December, the only thing eHealth could claim is a few test enrollments for subsidy-eligible customers, because the federal government still hasn't made a workable solution available to its private partners.

2. CGI Group (GIB 2.63%)
While plenty of fingers have pointed at information technology consultant CGI Group with the horrible launch of Obamacare's website, for most of 2013 the company's stock has pointed upwards. CGI's shares jumped more than 52% this year.

Granted, much of the CGI Group's gains stemmed from sources other than Obamacare. However, a contract worth as much as almost $300 million isn't chump change even for a company racking up yearly revenue topping $9 billion. Around 28% of CGI's total revenue stems from U.S. government contracts.CGI also helped build several state-operated Obamacare exchanges.

Lucrative Obamacare contracts, combined with solid performance in other areas within the company, helped CGI get of to a great start in 2013. However, the stock has muddled along since the Oct. 1 roll-out of the online health insurance exchanges. CGI was hammered publicly by a congressional committee investigating the botched Obamacare implementation in late October, with the company's representative shifting the blame to others -- including the federal government itself.

3. WellPoint (ANTM 0.92%)
No health insurance company has aligned itself with Obamacare as closely as WellPoint. The nation's second-largest health insurer opted to participate in the health insurance exchange for every state where it operated. WellPoint's stock scored huge gains in 2013, climbing 51%.

Did the Obamacare connection help make WellPoint a big winner? Yes -- and no. The company's participation in those state exchanges hasn't made much difference so far. Obamacare enrollment has been far behind projections.

However, another facet of Obamacare has helped WellPoint. As a result of the health reform legislation, several states have expanded their Medicaid programs. Those states include California and New York, both of which happen to be states where WellPoint does business. Medicaid enrollment stands out as one of the few bright spots for Obamacare thus far. WellPoint, with the largest Medicaid membership of any major insurer, is poised to be a big beneficiary.

More winners
Plenty of other companies associated with Obamacare did very well in 2013, also. Eager anticipation of the expected wave of newly insured Americans on the way has pushed hospital stocks way up over the past couple of years. Shares of HCA Holdings (HCA -2.75%), the largest private hospital chain in the U.S., surged 49% over the past 12 months. However, the problems appear to have put a damper on HCA's stock since October. 

Walgreen (WBA -1.40%) stepped forward as one of the more visible proponents of Obamacare in July. The big pharmacy retailer joined forces with the Blue Cross Blue Shield Association on a national campaign to educate Americans about the health reform legislation. Although it's questionable how much real impact Obamacare has made on Walgreen's financial position at this point, there's no question whatsoever that the stock is doing great. Shares are up 51% in 2013.

Will all of these stocks continue to win as a result of Obamacare in 2014? For some, particularly HCA, it depends to a large degree on how many Americans actually enroll. If Obamacare recovers from its shaky start, we could see even more winning stocks. If not, WellPoint could be the best investing option of our big winners from this year as states expand Medicaid. The best way to win is to play where the odds are most in your favor.

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Stocks Mentioned

Walgreens Boots Alliance, Inc. Stock Quote
Walgreens Boots Alliance, Inc.
$37.97 (-1.40%) $0.54
Anthem, Inc. Stock Quote
Anthem, Inc.
$481.31 (0.92%) $4.37
HCA Healthcare, Inc. Stock Quote
HCA Healthcare, Inc.
$167.84 (-2.75%) $-4.74
eHealth, Inc. Stock Quote
eHealth, Inc.
$9.04 (-4.24%) $0.40
CGI Group Inc. Stock Quote
CGI Group Inc.
$81.13 (2.63%) $2.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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