“The Obama Stimulus — Life-Changing Investments” Motley Fool

By Travis Johnson, Stock Gumshoe, October 26, 2009

“The TRUTH About the Obama Stimulus…

“When Ronald Reagan signed his $750 billion stimulus plan in 1981, it snapped the U.S. out of a deep recession, ignited a high-tech revolution, and signaled the start of the greatest bull market in history…

“Today, Obama’s stimulus plan could offer even more potential for investors. Because this little-understood government spending spree is highly focused and promises to “accelerate” payouts to a select group of high-tech companies — creating a once-in-a-lifetime opportunity for quick and substantial gains”

That’s the gist of the opportunity that the folks at the Motley Fool believe lies before us today — and if you subscribe to their Stock Advisor newsletter, they’d be happy to share the specific companies they like best to profit from this theme. But of course, they also share a few clues with us … so what are the stocks we should be buying, per the Gardner brothers?

“Last year was a brutal year for investors. Because for years, the so-called “professionals” on Wall Street played roulette with YOUR money.

“And even though they touched off the biggest financial meltdown in history, they’re rewarding themselves with $18 billion in bonuses to rebuild THEIR fortunes! A staggering $112,000 per employee.

“But who’s looking out for you? Who’s going to help build YOUR wealth?

“You, that’s who… with our help…

“Remember, Wall Street is up against the ropes. Congress and the SEC are constantly knocking on their door with new subpoenas.

“Now’s the time to beat them to the punch and snap up the 3 life-changing investments you’ll read about just ahead…

* “The high-tech monopoly poised to gobble up millions in stimulus
* “The energy company that’s primed for super growth in the coming natural gas boom
* “The rock-solid telecommunications firm whose circuits are found in today’s most popular devices”

So those are our three little gems to search for. Some more clues?

“Here at The Motley Fool, we’re reading the fine print of Obama’s stimulus plan.

“And zeroing in on a small group of nontraditional companies that could grow your money for years to come.

“So let’s take a quick look at each of these incredible investments… starting with our first company, which is in the sector the U.S. Department of Labor estimates will generate 3 million new jobs by 2016.

“And by 2010, Americans will be faithfully handing over $2.6 trillion each year to companies in this industry… Here’s how you can profit from this phenomenon:

“With the high-tech monopoly poised to gobble up millions in stimulus

“… it’s no wonder that the biggest chunk (over $80 billion) of Obama’s stimulus plan will go toward improving our health care system. Because we’re going to need it…..

“And here’s how you can profit from Obama’s massive investment in health care: by investing in this high-tech private sector company that could win big government stimulus contracts for digitizing health records.

“Though this might seem mundane on the surface… it’s a complicated process that only a few companies know how to do. And digitizing health records makes health care more efficient and saves hospitals and the government billions of dollars each year….

“And this high-tech company is in the perfect position to cash in. It’s gobbled up a huge market share of the health care IT business, with 70% of the nation’s leading hospitals already using its systems and software.

“It develops and installs electronic systems that eliminate the need for paper prescriptions and paper medical records providing doctors with easy and secure online access to patient information — lowering costs and improving care.

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“And so far it’s been working. This company prevents more than 330,000 medication errors every week through technology that helps to ensure the right patient gets the right drug at the right time.

“Plus its ties to the Obama Administration practically guarantee it a boatload of new business once Congress floods the economy with hundreds of billions — the bulk of the remaining stimulus….

“I can’t wait to give you this company’s name and ticker symbol — all the important details and how much you can expect to make when it takes off — but out of respect for our members, I have to give all this to you in the form of a brand-new special report…”

Your friendly neighborhood Stock Gumshoe, of course, has no such reservations … and I can tell you that this is McKesson Corp (MCK). I was a little surprised to discover this, actually, since the Motley Fool has made boosterism for Quality Systems (QSII) somewhat of a cottage industry in recent years, constantly touting it as one of Tom Gardner’s most successful picks (which it was — he’s been recommending it for several hundred percentage points in gains). The last time I covered that one, I think, was when it was touted as a way to profit from Obama’s 100-day profit plan (the stock is up about 50% from that point).

But QSII is a relatively small electronic health records company — McKesson is a big fish, with pharmaceutical data a big part of their business, and they do claim to help avoid more than 330,000 medication mistakes thanks to their barcode technology. They started out as a pharmaceutical wholesaler and have branched out into healthcare IT and other areas — and they are very engaged in the healthcare reform legislative process, releasing white papers with recommendations for the various task forces and, I’m sure, talking the ears off of anyone involved in the debate.

And it is certainly a profitable and growing business, arguably with a reasonable valuation for the blue chipper of the sector — it’s a market cap of about $16 billion, and a forward PE ratio of about 13, not bad for growth that’s expected to be better than 10% a year (their earnings shrunk year over year, but they’re certainly not alone in that). It seems unlikely that McKesson is going to knock your socks off, since it’s already a huge company with 17 analysts covering the shares and it’s core business is in wholesaling, which tends to have veryt ight margins. But if you think health care digitization and electronic recordkeeping and tracking of pharmaceuticals will be a growth area, this is certainly a solid choice in the sector, particularly for those who are a bit more risk-averse. It’s likely to be a lot more stable than the popular smaller-cap medical records digitization companies like Quality Systems or athenahealth (ATHN) or their other competitors, which trade at far loftier valuations.

As you’ve noticed if you’re reading this shortly after it was written, I’m well behind schedule today, so I’ll delve into the other two Fool ideas in this ad tomorrow — have a great evening!


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