When managed-care provider WellCare Health Plans
Clearly, it's much easier for me to play Monday morning quarterback than it is to make the actual calls. Some signs could have been the basis for a downgrade, such as multiple top executives of WellCare selling shares in April and again in June. Valuation concerns are also reasonable, given the stock's unhindered 82% run-up in price over the past 52 weeks. And in June, WellCare, along with six other insurers -- including UnitedHealth Group
That said, WellCare has consistently been churning out quarterly earnings that far surpass those of the year-ago quarter -- its 49% year-over-year increase in Q1 net income is a prime example. I can't remember the last time that I read the "guidance" section of its earnings release when it hasn't opened with the phrase, "The company is raising its previously issued guidance of ..."
The company is set to report its Q2 results on Aug. 2, when we'll see if this impressive streak of earnings growth continues, and by how much. In the meantime, I wouldn't want to maintain a short position in this stock -- at least, not until the company's earnings numbers begin to indicate otherwise. I definitely believe the Jefferies & Co. upgrade was the proper course today, and the next few quarters will prove whether I'm right.
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