No one knows whether a stock is going to pop or drop in any given month or year, but our Motley Fool contributors say specific catalysts could move each of these three stocks higher over the next month, and that might be reason for investors to consider buying them.
Since the second Affordable Care Act insurance open enrollment period will close on Feb. 15, plenty of attention is likely to be focused on enrollment numbers and new members' potential impact on insurers' top and bottom lines in 2015.
Overall, health insurers have forecasted that operating margins for customers who enrolled through the exchanges will be in the 3% to 5% range, which means every new member added has a significant opportunity to boost earnings. Through early January, federally run healthcare.gov exchange enrollment is tracking at a very healthy 6.8 million, which suggests there's a good shot at meeting or beating the administration's 9 million-plus enrollment projection from November. According to the Commonwealth Fund, the average premium for a silver-level plan for a 40-year-old nonsmoker is $314. Since silver-level plans accounted for roughly 60% of exchange plans picked last enrollment period, total membership of 9 million people would suggest 5.4 million silver plan members, representing $1.7 billion in premium revenue per month alone for the health insurance industry. That's a lot of money, and possibly no insurer is better positioned to benefit than UnitedHealth, which offered plans through the exchanges in 23 states this year.
Cheryl Swanson: Generic-drug company Actavis' (NYSE:AGN) fourth-quarter and full-year 2014 results won't be available until mid-February, but the Ireland-based drugmaker has already told investors to look forward to an exceptional performance.
According to a company release, "Based on a preliminary review of 2014 fourth quarter results, it [Actavis] expects non-GAAP EPS to outdo Wall Street consensus estimates by 10% to 15%."
Will the actual results match the company's prediction? Impossible to say, but Actavis has more than delivered on its promises in the past. In the last five years, this company has quintupled sales and delivered shareholders a 545% return.
The conglomerate created through last year's $66 billion Allergan buyout (expected to close in the first half of this year) has turned Actavis into the world's 10th-largest drug company. CEO Brent Saunders, the architect of four major pharma deals, is already preparing something new for his next move. He intends to avoid early stage research and development, with its spending in the hundreds of millions and low odds of success, and instead buy promising drug candidates from universities and biotechs. Saunders is unconventional, but his deals and ideas have driven Actavis' shares ever upward. I already own Actavis, and I'm looking to increase my position.
Dan Caplinger: The healthcare stock I'm looking at closely for February is Celgene (NASDAQ:CELG), the biotech giant behind the multiple myeloma treatment Revlimid. This cancer fighter makes up about two-thirds of the company's overall sales, but Celgene has other promising weapons in its arsenal, including breast-cancer treatment Abraxane and newly released psoriasis drug Otezla. Moreover, Celgene has aggressively pursued partnerships with other biotech companies, including Agios and bluebird bio, which should spur further growth.
Still, Revlimid is a huge factor in Celgene's near-term success, and a major catalyst could drive Celgene higher in February. Currently, Revlimid is approved as a second-line treatment, which means it is used after another treatment method has not produced optimal results. But in the next month or so, the Food and Drug Administration is set to decide whether to approve Revlimid as a first-line treatment, opening the door for doctors to prescribe its use without first having to go through a previous treatment regimen. If Revlimid wins FDA approval for its expanded indication, it could help Celgene boost sales of the drug well beyond its current annual rate of over $5 billion and bring the company's long-term overall sales goals within reach.
Cheryl Swanson owns shares of Actavis, Agios, and Celgene. Dan Caplinger has no position in any stocks mentioned. Todd Campbell is long Celgene. The Motley Fool recommends Celgene and UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.