For all the shots the Affordable Care Act, or Obamacare, has taken, the inevitable march onward continues. Some data are starting to emerge since the implementation of parts of the program, and it looks pretty promising for some of the top players in the game. A new research report from UBS points out that based on IMS monthly prescription drug data, an increase in volume is starting to show up in the reports. In fact, May volume growth was up almost 3% year-over-year.
The key for investors is who benefits from this surge in prescription volume? The UBS team highlights six top stocks that are seeing this increased volume. Increased volume means increased sale and revenues, and since this trend is relatively new, it could pay out big the rest of this year and beyond.
Here are the six top stocks for investors looking to benefit from Obamacare prescription volume increases.
AmerisourceBergen Corp. (NYSE: ABC) is the world’s largest pharmaceutical distributor and trades at a sensible 17 times forward earnings per share estimates. Last year the company completed the divestiture of its Canadian distribution business to Kohl & Frisch, the country’s only Canadian-owned national full-line pharmaceutical distributor. The company’s board of directors recently authorized a special $650 million share repurchase program intended to supplement the company’s previously announced warrant hedging strategy. Investors are paid a 1.3% dividend. The Thomson/First Call consensus price target is at $76.03. The stock closed Wednesday at $72.10 a share.
Cardinal Health Inc. (NYSE: CAH) is another top name in the health care sector. The drug wholesaler’s board authorized an additional $1 billion in stock repurchases in the first quarter of this year. The new authorization is in addition to the company’s existing stock repurchase plan, which has $350 million remaining. The company is projected to grow earnings by 10.4% to $4.07 in 2015. For 2016, Cardinal is projected to increase earnings by 11.3% to $4.53. Investors receive a 2% dividend. The consensus price target is $77.35. Cardinal closed Wednesday at $68.78.