This Stock Will Make Your Portfolio Healthy
Get The Wall Street Journal for 75% off!
With the
economy the way it is, it's hard to find any company that is even
somewhat sheltered from being beaten down. There is a company,
however, that is defying the market's gravitational pull.
eHealth Inc.
(EHTH) is an internet based health insurance provider
for families and small businesses. Their headquarters is based in
the same city as Google in Mountain View, CA, and was established in
1997. Despite the downturn, they have doubled the number of
policies from nearly 500,000 in 2007 to presently over 1,000,000.
The potential for US subscribers is much larger still.
They also have a partnership with Alltrust Insurance Agency Co. in
China that gives them access to the extremely vast and developing
market for health insurance in China. Having a foothold in China
gives eHealth the opportunity to grow many times its current
size.
eHealth's financial condition
is outstanding:
- They maintain a profit margin of 31% and have very minimal liabilities.
- With no long-term or short-term debt, the only significant liabilities eHealth carries are Accounts Payable.
- Their year-over-year quarterly revenue growth is at 24%.
- The stock price has a PE of 10x, which is low for such a high growth company.
I believe eHealth is one of those rare, undiscovered great companies that will skyrocket when investors realize the value in it. This stock has a market cap of less than $350 million and about 25 million shares outstanding. If you asked William O'Neil, founder of Investor's Business Daily, he would say that this is the type of stock that will generate returns into the 1000%'s over time because it fits his time-tested, but strict investing formula.
Although the "buy and hold" stock investing strategy hasn't been working in this wild-swing market, eHeatlh's stock has the potential to yield huge returns if you hold it for 3 to 5 years.
Check Out the New Strategy Store
Right now we have a report on a major multi-billion dollar merger that will be closing early 2009. Find out how to profit from it. It is called the 20% Acquisition Deal at the Strategy Store. You can make over 20% return in only 2-3 months with very low downside risk!
Absolutely Free Virtual Stock Portfolio, Win REAL Money!
You can win real money for beating the market with your virtual portfolio and creating stock analyses. Win one of the quarterly $10,000 contests or the $3000 monthly contests. Write about stocks and get paid. Did I mention that this is all Free?
Updown has made me a better investor; it costs me nothing to make mistakes and I had $1 million to start with. This is a great virtual stock game for those who want to practice before investing, get better at trading, or just want to have fun and make some money. Trade stocks like a pro and don't pay a cent!
Just CLICK on one of the
links to get started!But if you do want to start a real portfolio with real money with ultra low commissions, $0 commissions, go to: www.zecco.com. There is no minimum to open an account. Accounts under $2500 have to pay $4.50 per trade. That's still the best brokerage deal that I've ever heard. I thought $7 trades were cheap.
Cheap? No. 100% Free. Trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com
The Fed Cuts Interest Rates Again, Target: 0%-.25%
The discount rate was cut by 75 basis-points or .75% to .5% from 1.25%. The Dow Jones Industrial Average rallied up to 3% right after the announcement, and then it dropped several minutes later to up over 2% or 185 points.
This is the lowest level that has ever come out from the Federal Reserve since it was established. They are going to have to seek other means of easing this beaten up and suffering economy. After lowering rates meeting after meeting, the Fed is running out of tools and is going to have to get creative if they are going to help. The Fed's balance sheet has more than doubled from $900 billion to almost $2.2 trillion.
Cutting interest rates is not at all close to a "cure-all". Japan's interest rates stayed at 0% for years, and they have undergone one of the longest recessions any country has seen. They have been in a recession since the 1980s. One thing that we have done right that Japan didn't is mark-to-market accounting. They refused to write-down their inflated real estate portfolios with the hope that the market would turn around soon, but then again that has absolutely nothing to do with the Fed.
Cheap? No. 100% Free. Trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com
At some point, we have to realize the Fed is not going to save us. We have to let these things work themselves out. With automakers and banks still on the brink of failure, the only thing we can do is wait to see what happens, and then move on.
Living in Florida, it reminds me of something we do when disaster hits. During a hurricane, all you can do is hunker down and make it through. You have to wait for the storm to pass to assess the damage. Only then can you start to get everything back to normal. Trying to repair things in the middle of a storm is almost always a failed effort.
Value Investing Basics Part II
Historical research shows that stocks with low P/Es have performed better over time than high P/E stocks. The P/E ratio is the multiple of earnings per share (EPS) that the stock price currently is (Ex: Stock A has EPS of $3, and P/E of 10x; the stock price= $30). However, to find really solid stocks there are lot more aspects to look at than simple P/Es, because the P/E ratio doesn't paint the whole picture of the company.
After you have read Part I - Value Investing Basics for Beginners, you should know what type of companies to look for. You now need to follow these guidelines for making sound value investments. You can input these requirements into stock screeners to find undervalued stocks. Most of these ratios are readily available in Yahoo! Finance information for companies.
Buy
Stocks Online for $0. Trade stocks for free on Zecco.com. The Free Trading Community. www.zecco.com
Value Investing Guidelines
Screen:
1.
PEG Ratio less than 1.
2. Net profit margin more than 15%.
3. Return on Equity more than 15%.
4. Return on Assets more than 10%.
5. Earnings growth of 10% or more over the past 5 years.
6. Growing Cash Flow from Operating Activities.
7. Low Debt relative to Gross Profit- Total Debt should not exceed
3 or 4 times Gross Profit.
Although these are not hard, fast rules, these are guidelines that
will sift out great companies from the not-so-great companies. If
the stock has a low PE with all of these requirements, it is an
attractive stock.
These requirements make the PEG Ratio important. The PEG ratio
equals the PE ratio divided by the expected EPS growth rate for the
next 5 years (Ex: a stock has PE of 9 and a five year EPS growth
rate of 15%; so 9/15= .6 PEG ratio). Many value investors buy
stocks from just the PEG ratio. Although it adds an important
element of profitable growth to the PE number, you still have to
look at factors other than the PEG.
Now you understand the fundamentals of how to Value Invest. This
list and Part I allow you to find sound value investments. There
are more details that some investors use, which I will post later
about. Happy Investing!
Suggested
Reading:
Special Free Week offer to either the Print or Online
editions of The Wall Street Journal!!!
