The year 2016 hasn't been a smooth sail for the overall healthcare sector - thanks to the 'oh so complicated' political game changing and controversies surrounding Obamacare. This has dragged the S&P 500 Health Care Index down, making it the worst performing among the 11 major S&P 500 sectors, with a meager 0.5% gain year to date.
Unclear State of U.S. Health economy
While the battle is on between the democrats and republicans on whether or not to sustain Obamacare, recent healthcare trends have been far from encouraging. A report by Mark E. Murphy on Obamacare goals, reveals more miss and less hit cases so far. According to him, this celebrated Affordable Care Act (ACA) resulted in higher deductibles, higher premiums and consequently higher out-of-pocket costs overall for most of the previously insured. It helped only the uninsured lot.
The nation has realized the caveat. And although the full repeal of this act as claimed by Trump, is another controversy, today, after six years of the enactment of ACA, 51% of the Americans say Obamacare has failed to make any positive change in their lives or families.
Is Healthcare Service an Exception?
However, every cloud has a silver lining. While the industry is striving to rein in healthcare costs and stay afloat, there is good news for the healthcare service sector as a whole. As per the latest Census Bureau Quarterly data released last week, there was a greater-than-expected 6.9% surge in spending during the second quarter. And this was fully outlaid on the health care services sector.
Thanks to the ever-growing number of insured, hospital revenues jumped 6.6% year over year in the second quarter (as per a report in Investor's Business Daily). Apart from hospital stocks, ambulatory care services' stocks, and nursing and residential care facilities are also booming, with spending of more than 7% and 6%, respectively.
Medical Service Stocks on Buyers' Radar
Medical service, as defined by Zacks, is a niche area under the medical device subcategory within the broader Medical sector. Accordingly, it holds relatively more promise right now. Currently, the medical services space is ranked the 104 th best industry out of the 265 industries covered by Zacks.
Let's take a look at the major Medical Service stocks that can endure the broader ailment and duly reward investors. More importantly, these stocks flaunt a favorable Zacks Rank #1 (Strong Buy) or #2 (Buy):
The Advisory Board CompanyABCO
This is a best practices' firm providing a combination of research, technology and consulting to improve the performance of more than 5,500 health care organizations and educational institutions globally. The stock has an impressive expected five-year growth rate of 17.1% and delivered an earnings surprise of 59.1% in its last reported quarter. The Advisory Board currently sports a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .
AMN Healthcare Services Inc.AHS
This is a prominent name in the field of healthcare workforce solutions and staffing services in the U.S. The company has expanded substantially, with revenue growth of 41% in 2015. The stock currently carries a Zacks Rank #2 and has an impressive expected five-year growth rate of 12%.
Formerly known as CardioNet, Inc., this is a wireless medical technology company working on the delivery of health information targeting an improvement in the quality of life and thereby reducing the cost of care. This stock also holds immense potential taking into consideration the company's Zacks Rank #2 and upward estimate revision trend. BioTelemetry delivered an earnings surprise of 25% in its last reported quarter.
This Zacks Rank #2 stock provides network delivered solutions and population health management services. The stock could be a great pick now as it has an impressive expected five-year growth rate of 13.3%. It delivered an earnings surprise of 5300% in its last reported quarter.
INC Research Holdings, Inc.INCR
This is a contract research organization providing clinical development services for the biopharmaceutical and medical device industries. INCR currently carries a Zacks Rank #2 and has an expected five-year growth rate of 15.5%. Hence, it can be a good pick.
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