Yesterday’s Daily Alert introduced a stock from the growing field of voice recognition for health care providers (read the recommendation here if you missed it). Today’s pick is another leading provider of IT solutions to the health care industry, and it’s benefitting from all the same trends. Here’s Cabot Top Ten Trader Editor Michael Cintolo with the recommendation.
“The ‘cloud’ is coming health care, and the world’s largest stand-alone maker of health IT systems, Cerner Corp. (CERN), is positioned to spearhead the revolution. Not only did the U.S. government include Health Information Technology for Economic & Clinical Health (HI TECH) as part of the 2009 stimulus, but it also earmarked $19 billion specifically for this effort to entice hospitals to go digital. Cerner has already shown signs of benefitting from the stimulus, with sales growing at an annualized rate of 9% and earnings rising 22% during the past five years. What’s more, it doesn’t matter what the Supreme Court does to the Patient Protection and Affordable Care Act (PPACA), there is very little potential for blowback on healthcare IT. Finally, with the healthcare IT market awash in cash, it take innovation to stay on top and attract new customers. Cerner is certainly no slouch in this department, generating 32% of its income from new clients in 2011, 28% in 2010 and 24% in 2009. The bottom line is that Cerner provides investors with both growth and safety in a turbulent market.
Technical Analysis
“CERN shares have been impressive since the 2008 bottom, successfully weathering several broad-market pullbacks. In fact, every patch of weakness during the past four years have found support at CERN’s rising 52-week moving average. Recently, shares held up remarkably well amid a major market correction. After tagging a fresh all-time high above 84 in early May, CERN consolidated into support at 75 and rebounded back above support at its 50-day moving average. And today the stock exploded to new highs! If you’re game, buy a little on weakness with a stop around 81. Suggested buy range: 83-86. (Cabot’s buy range is valid for two weeks.)”
- Michael Cintolo, Cabot Top Ten Trader, June 18, 2012