Here is a big way to profit from Obamacare. It is no secret that
the population in the US -- as it is in Europe and Japan -- is
aging. The baby boomers are retiring, and it won't be long before
they will face health challenges.
One way to profit is to invest in a new growth market: Nursing
Omega Healthcare Investors
) is a Maryland-based owner of more than 400 nursing and assisted
living facilities in 35 states. It's a real estate investment trust
(REIT), and there's plenty of room for further acquisitions of
health-related properties. It offers a healthy balance sheet and
Revenues rose 20% in the past year to $367 million, and earnings
advanced 46% to $133 million. With 36% profit margins, OHI's return
on equity (ROE) is more than 13.5%.
Omega has had a rising dividend policy for the past ten years.
Today, Omega pays out a $.46 dividend per share (6.5% annualized
yield), the highest of its peers.
Despite a rising stock price, Omega sells for 13 times estimated
earnings in 2013 and has been beating estimates. Let's add Omega to
Meanwhile, traditional housing stocks are still on fire. Sales of
new homes in April were up 29% from last year, hitting a
better-than-expected seasonally-adjusted rate of 454,000. The data
builds on recent evidence that the US housing market is finally
getting back to full health.
Pent-up demand is one factor behind the improving sales of new
homes. "Household formation actually ramped up for the last year or
two after some pretty substantial declines,"
) CFO Bob O'Shaughnessy said.
I am recommending
D.R. Horton, Inc.
), the country's largest residential homebuilder. The company
reported earnings in April, but since then, other major housing
companies have announced blockbuster earnings, boosting the whole
Rival PulteGroup reported strong first-quarter results with
double-digit percentage increases in home sales, improved sales
prices, gross margin expansion, and solid overhead leverage.
Toll Brothers Inc
) announced a 33% increase in home sales and a 38% increase in
revenues year to year.
Texas-based builder D.R. Horton will report earnings again in July.
It builds single-family homes, duplexes, townhomes, and
condominiums in 26 states. It also originates and sells mortgages,
as well as title insurance policies and other closing services.
In the most recent quarter, earnings soared 173% on a 49% increase
in sales ($5.1 billion). Profit margins are 21% and management is
earning a healthy 33% return on equity. Yet the stock is still
cheap, selling for only nine times earnings. It has plenty of room
to increase its dividend dramatically.
Editor's Note: This article was written by Mark Skousen of
Forecasts & Strategies
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