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The great Michael Jackson once sang, “ABC…easy as 1-2-3”….however, now with Obamacare…you could say, “AGP…easy as dough – re – mee”. That’s right faithful, $$$MR. MARKET$$$ is dipping his wick into the healthcare sea once again.
Today I bought AGP (AMERIGROUP Corporation) at 69.23. I will sell it in 4 – 6 weeks at 79.80. Here’s why I like AGP:
For crying out loud, look at the stupid chart…jeez louise!!
This may not be the Stairway to Heaven, but it certainly is an escalator to a pot of gold. This stock is up 87% in the last 52 weeks yet its PE ratio is only 11.48. It’s a growth company that’s cheeeeeeeap! AGP appears undervalued based on its Price/Earnings which is less than the Health Care sector’s bottom quintile value of 14.37.
AMERIGROUP Corporation is a managed healthcare firm that extends healthcare benefits through a variety of publicly-sponsored programs such as Medicaid, Children’s Health Insurance Program (CHIP), Medicaid expansion programs, and Medicare Advantage. The company has an extensive customer base spread across the states of Texas, Florida, Maryland, New Jersey, New York, Illinois, and the District of Columbia. Most of them subscribe to the Amercaid scheme. Other popular plans include Amerikids, Ameriplus, and Amerifam. The corporation offers a plethora of medical, social, and behavioral health services to its members. The firm garners revenues through premiums and income from investments. It competes with Wellpoint, CIGNA, AmSurge, and United Health Group, among others for market share.
If there was ever a time for real solutions, it’s now.
Our health care system has problems. People are having trouble getting the care they need to live full and independent lives. States are trying to do more with less. Instead of looking at these problems from 30,000 feet, AGP wrestles with them from the ground up. Going the extra mile to make health care better for those they serve—that’s where real solutions come from. Yea…and that’s how I’m going to make money on this stock…SUCKA!
They are constantly seeking to improve the quality of health care for their members--new programs, new products, fresh new ideas. But at the end of the day, the thing that makes their approach successful is the dedicated work of their care givers who meet their members where they live, take the time to understand their special needs and commit to helping them build healthier and better lives. Sounds wonderful and they are making money to back it up!
If you like technical charts, AGP outperformed the S&P 500 Index 66.67% of the time in May, with an average excess return of 2.85%. This makes AGP and $$$MR. MARKET$$$ a very good pair, since we both enjoy crushing the S&P 500. AGP's outstanding performance (97th percentile vs. Russell 3000 companies), coupled with its low risk (35th percentile), indicates a very high intrinsic valuation is warranted.
Over the past three years, the company has reported 4 positive (>2%), 0 negative (<-2%), and 0 in-line (within 2%) surprises. The average surprise for this time period has been 48.0%. Most recently on 04/29/11, the company reported quarterly earnings of 1.37 per share, a positive surprise of 61.6% above the consensus 0.85.
AGP's current quarter consensus estimate (from ANAL-ysts) has increased over the past 90 days from 1.02 to 1.08, a rise of 5.4%. Consensus estimates for the Healthcare Providers Subsector have moved an average 0.0% during the same time period.
For companies with highly cyclical earnings or that have losses, the price to sales ratio (P/S) can be a useful valuation measure. This ratio is also helpful in valuing companies in industries with narrow profit margins. A lower P/S ratio is effective in signaling undervaluation and therefore outperformance. AGP has a P/S ratio of 0.57 versus the group’s median of 0.90.
Most health insurers are guiding for higher earnings in 2011, despite cost pressures from the new health care reform law, while those expecting earnings to be below their 2010 results are guiding for targets that are also higher than ANAL-ysts expected. Obviously Obamacare is positive, on balance, for managed care organizations (MCOs).
The punchline is that $$$MR. MARKET$$$ made money recently with Healthspring (HS), which focused on Medicare…so now I am going to the other side of the plate and am going to take my next profit on the back of Medicaid. Managed care serves multiple markets and end users. In 2014, 32 million new consumers will hit the market, when Obamacare expands eligible health-insurance enrollees. Half of those are currently uninsured who will gain access to insurance through state exchanges or the federal government. Medicaid will then be available to another 16 million previously ineligible, low-income Americans. Medicaid is jointly funded by federal and state sources, but is managed at the state level. It offers the biggest growth opportunity for managed care companies. Once Obama put a bullet in Osama’s head, he locked up his re-election. So this baby will continue to run.
AMERIGROUP Corporation reported unaudited consolidated earnings results for the first quarter ended March 31, 2011. For the quarter, the company reported total revenues of $1,539,915,000 against $1,371,649,000 for the same quarter last year. Income before income taxes was $112,777,000 against $68,482,000 for the same quarter last year. Net income was $70,477,000 or $1.37 per diluted share against $42,182,000 or $0.82 per diluted share for the same quarter last year.
Premium revenue for the first quarter of 2011 increased 12.4% to $1.54 billion versus $1.37 billion in the first quarter of 2010. Sequentially, premium revenue increased $37.9 million, or 2.5%. The sequential increase primarily reflects the expansion in FortWorth, Texas, where the company began serving approximately 29,000 aged, blind and disabled members on February 1st under a full-risk contract. In addition, revenues benefited from continued membership increases across many of the company's markets, rate increases in several states, as well as lower accruals in the quarter for gain sharing arrangements with State customers.
The company reaffirmed earnings guidance for the year 2011. The company expects revenues growth for the year to be in the upper single digits percentage rate. Net income margin to be in the range of 2.5% to 3.5%, unchanged from previous guidance. Cash flow in 2011 will be in the range of 1 to 1.5x net income consistent with previous expectations. The company is now expecting 2011 net income margin to be at the upper end to above long-term range of 2.5% to 3.5%.
For fiscal year 2011, ANAL-ysts estimate that AGP will earn $4.45. For the 1st quarter of fiscal year 2011, AGP announced earnings per share of $1.37, representing 31% of the total annual estimate. For fiscal year 2012, ANAL-ysts estimate that AGP's earnings per share will grow by 2% to $4.52.
I guess no one seems to be paying attention to what’s going on out there. $$$MR. MARKET$$$ predicts that AGP will gross revenues of $6.6 billion in 2011. Based on the fact that their ROE is over 25%, this will generate earnings of $7.61 per share. Taking these earnings and multiplying it by the PE of 11.48, you get a share price of:
$7.61 x 11.48 = $87.36 which is well past my sell target.
Here’s what the boss had to say:
"Medical cost trends continued to be moderate in the first quarter, and, while this can be partially attributed to favorable market conditions, it is also due to adept execution of our strategies and interventions to drive better delivery system access, performance and accountability," said James G. Carlson, Chairman and CEO of Amerigroup. "This execution is critical as we prepare for the opportunities ahead of us and proves that real solutions for the healthcare challenges facing our nation do exist and are possible on a much bigger scale."
Look, $$$MR. MARKET$$$ doesn’t want anyone to get sick. But everyone gets old and it kind of goes hand in hand. So if someone’s going to get sick, I hope there is someone out there that can make them better. If someone’s going to get better, then they’ll be happy and I’ll be happy when I make money on this stock.
I am HUGE!!
Please forward this write up to 3 of your best friends.
$$$MR. MARKET$$$
www.mrmarketishuge.com
Today I bought AGP (AMERIGROUP Corporation) at 69.23. I will sell it in 4 – 6 weeks at 79.80. Here’s why I like AGP:
For crying out loud, look at the stupid chart…jeez louise!!
This may not be the Stairway to Heaven, but it certainly is an escalator to a pot of gold. This stock is up 87% in the last 52 weeks yet its PE ratio is only 11.48. It’s a growth company that’s cheeeeeeeap! AGP appears undervalued based on its Price/Earnings which is less than the Health Care sector’s bottom quintile value of 14.37.
AMERIGROUP Corporation is a managed healthcare firm that extends healthcare benefits through a variety of publicly-sponsored programs such as Medicaid, Children’s Health Insurance Program (CHIP), Medicaid expansion programs, and Medicare Advantage. The company has an extensive customer base spread across the states of Texas, Florida, Maryland, New Jersey, New York, Illinois, and the District of Columbia. Most of them subscribe to the Amercaid scheme. Other popular plans include Amerikids, Ameriplus, and Amerifam. The corporation offers a plethora of medical, social, and behavioral health services to its members. The firm garners revenues through premiums and income from investments. It competes with Wellpoint, CIGNA, AmSurge, and United Health Group, among others for market share.
If there was ever a time for real solutions, it’s now.
Our health care system has problems. People are having trouble getting the care they need to live full and independent lives. States are trying to do more with less. Instead of looking at these problems from 30,000 feet, AGP wrestles with them from the ground up. Going the extra mile to make health care better for those they serve—that’s where real solutions come from. Yea…and that’s how I’m going to make money on this stock…SUCKA!
They are constantly seeking to improve the quality of health care for their members--new programs, new products, fresh new ideas. But at the end of the day, the thing that makes their approach successful is the dedicated work of their care givers who meet their members where they live, take the time to understand their special needs and commit to helping them build healthier and better lives. Sounds wonderful and they are making money to back it up!
If you like technical charts, AGP outperformed the S&P 500 Index 66.67% of the time in May, with an average excess return of 2.85%. This makes AGP and $$$MR. MARKET$$$ a very good pair, since we both enjoy crushing the S&P 500. AGP's outstanding performance (97th percentile vs. Russell 3000 companies), coupled with its low risk (35th percentile), indicates a very high intrinsic valuation is warranted.
Over the past three years, the company has reported 4 positive (>2%), 0 negative (<-2%), and 0 in-line (within 2%) surprises. The average surprise for this time period has been 48.0%. Most recently on 04/29/11, the company reported quarterly earnings of 1.37 per share, a positive surprise of 61.6% above the consensus 0.85.
AGP's current quarter consensus estimate (from ANAL-ysts) has increased over the past 90 days from 1.02 to 1.08, a rise of 5.4%. Consensus estimates for the Healthcare Providers Subsector have moved an average 0.0% during the same time period.
For companies with highly cyclical earnings or that have losses, the price to sales ratio (P/S) can be a useful valuation measure. This ratio is also helpful in valuing companies in industries with narrow profit margins. A lower P/S ratio is effective in signaling undervaluation and therefore outperformance. AGP has a P/S ratio of 0.57 versus the group’s median of 0.90.
Most health insurers are guiding for higher earnings in 2011, despite cost pressures from the new health care reform law, while those expecting earnings to be below their 2010 results are guiding for targets that are also higher than ANAL-ysts expected. Obviously Obamacare is positive, on balance, for managed care organizations (MCOs).
The punchline is that $$$MR. MARKET$$$ made money recently with Healthspring (HS), which focused on Medicare…so now I am going to the other side of the plate and am going to take my next profit on the back of Medicaid. Managed care serves multiple markets and end users. In 2014, 32 million new consumers will hit the market, when Obamacare expands eligible health-insurance enrollees. Half of those are currently uninsured who will gain access to insurance through state exchanges or the federal government. Medicaid will then be available to another 16 million previously ineligible, low-income Americans. Medicaid is jointly funded by federal and state sources, but is managed at the state level. It offers the biggest growth opportunity for managed care companies. Once Obama put a bullet in Osama’s head, he locked up his re-election. So this baby will continue to run.
AMERIGROUP Corporation reported unaudited consolidated earnings results for the first quarter ended March 31, 2011. For the quarter, the company reported total revenues of $1,539,915,000 against $1,371,649,000 for the same quarter last year. Income before income taxes was $112,777,000 against $68,482,000 for the same quarter last year. Net income was $70,477,000 or $1.37 per diluted share against $42,182,000 or $0.82 per diluted share for the same quarter last year.
Premium revenue for the first quarter of 2011 increased 12.4% to $1.54 billion versus $1.37 billion in the first quarter of 2010. Sequentially, premium revenue increased $37.9 million, or 2.5%. The sequential increase primarily reflects the expansion in FortWorth, Texas, where the company began serving approximately 29,000 aged, blind and disabled members on February 1st under a full-risk contract. In addition, revenues benefited from continued membership increases across many of the company's markets, rate increases in several states, as well as lower accruals in the quarter for gain sharing arrangements with State customers.
The company reaffirmed earnings guidance for the year 2011. The company expects revenues growth for the year to be in the upper single digits percentage rate. Net income margin to be in the range of 2.5% to 3.5%, unchanged from previous guidance. Cash flow in 2011 will be in the range of 1 to 1.5x net income consistent with previous expectations. The company is now expecting 2011 net income margin to be at the upper end to above long-term range of 2.5% to 3.5%.
For fiscal year 2011, ANAL-ysts estimate that AGP will earn $4.45. For the 1st quarter of fiscal year 2011, AGP announced earnings per share of $1.37, representing 31% of the total annual estimate. For fiscal year 2012, ANAL-ysts estimate that AGP's earnings per share will grow by 2% to $4.52.
I guess no one seems to be paying attention to what’s going on out there. $$$MR. MARKET$$$ predicts that AGP will gross revenues of $6.6 billion in 2011. Based on the fact that their ROE is over 25%, this will generate earnings of $7.61 per share. Taking these earnings and multiplying it by the PE of 11.48, you get a share price of:
$7.61 x 11.48 = $87.36 which is well past my sell target.
Here’s what the boss had to say:
"Medical cost trends continued to be moderate in the first quarter, and, while this can be partially attributed to favorable market conditions, it is also due to adept execution of our strategies and interventions to drive better delivery system access, performance and accountability," said James G. Carlson, Chairman and CEO of Amerigroup. "This execution is critical as we prepare for the opportunities ahead of us and proves that real solutions for the healthcare challenges facing our nation do exist and are possible on a much bigger scale."
Look, $$$MR. MARKET$$$ doesn’t want anyone to get sick. But everyone gets old and it kind of goes hand in hand. So if someone’s going to get sick, I hope there is someone out there that can make them better. If someone’s going to get better, then they’ll be happy and I’ll be happy when I make money on this stock.
I am HUGE!!
Please forward this write up to 3 of your best friends.
$$$MR. MARKET$$$
www.mrmarketishuge.com
I think i'll stay out of AGP for now, too many uncertainties to bet on it at this juncture.
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