Stock Spotlight: Lincare Holdings
Lincare Holdings [LNCR@LNCR] is far from the fanciest stock in the market. But with its high Long Term PowerRatings and high Industry PowerRating, Lincare Holdings is more than qualified to be our featured in our PowerRatings Stock Spotlight of the week.
Many of the stocks we have featured in this column over the past few weeks have reflected exactly what our Long Term PowerRatings have
indicated: that some of the best opportunities for investors lie in the so-called “recession-beater” sectors such as utilities, drug manufacturing and personal products. Often included in this group are health care related stocks, of which Lincare Holdings is a member.
Lincare Holdings, with its Long Term PowerRating of 9 and an Industry PowerRating of 10, owns and operates a number of facilities and subsidiaries in the health care field. The company is widely involved in this field, with business operations in oxygen and respiratory services, as well as medical equipment ranging from hospital beds to wheelchairs.
Based out of Clearwater, Florida, Lincare Holdings reported gains in first quarter earnings back in late April. The company warned that going forward earnings were likely to be impacted by Medicare price reductions.
As I mentioned, Lincare Holdings has a Long Term PowerRating of 9.
Based on our research, examining thousands of simulated stock trades between 1995 and 2007, we found that stocks with Long Term PowerRatings of 9 have been both more reliable and better performers than the average stock. Specifically, stocks with Long Term PowerRatings of 9 have been higher one year later more than 79% of the time. Compare this to the average stock, which has been higher one year later less than 68% of the time.
This factor, the likelihood that a stock will be higher in a year, is what I call the “reliability” factor. It is a key feature of high, Long Term PowerRatings stocks such as Lincare.
Lincare Holdings
In addition to reliability, active investors and long term traders want stocks that are likely to outperform, rather than merely match, the average stock. Here, too, we found that high, Long Term PowerRatings stocks were compelling. Our research indicated that stocks with Long Term PowerRatings of 9 have been higher one year later by 18% on average. On the other hand, the average stock was found to be higher one year later by 12-13% on average.
When it comes to our Long Term PowerRatings, our recipe for investing success is simple: one part high Long Term PowerRating stock, one part high Industry PowerRating. Lincare belongs to the Home Health Care industry group, an industry group with an Industry PowerRating of 10. This is the highest possible rating for an industry group, and those industries that have earned this rating have been among the most impressive performers since 1995. We found that industries with Industry PowerRatings of 10 have produced average annualized returns of more than 35%. This is more than double the average annualized return of the average industry group over the same time period.
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David Penn is Senior Editor for PowerRatings.net.