CERN & ESRX
Cerner Corporaton (ESRX)
Price: 98.83 , 3 star; MorningStar Fair Value: 100
Supplier of healthcare IT software, services, devices & hardware in a market shared mostly by Cerner and Epic. Beneficiary of new laws (American Recovery Reinvestment Act) and its HITECH (Health Info Tech Economic & Clinical Health) provisions. The 3 star, I guess, is only because it is now getting close to Fair Market value which in my view has always been overly conservative (with very few but noticeable misses in the tech arena).
Have you noticed the increased automation in your doctor's offices, for example? That is what made me research into this issue. Enjoys a WIDE MOAT rating and decent free cash flow. Switching costs for customers give it a stable clientele, and its own experience with all segments of the health industry give it a significant edge over the competition. I like this for its growth potential as well as for its role as a potential defensive stock as a member of the healthcare family. In short, a good long term prospect. I will add to my holdings if it dips anytime due to a general market but not stock specific correction. If I didn't have any, I would buy some now and time average over the year buying at dips.
Express Scripts (ESRX)
Price: 63; Fair Market Value 73; 4stars; Wide Moat
A thing that earned big money for Peter Lynch ("One up on Wall Street") was keeping his eyes wide open right at home and happenings around him such as his wife buying up Rubber Maid products like crazy. Are we ? If so, how could you have not noticed Medco as the prescription provider with increasing presence? With the acquisition of Express Scripts, they now hold a big market share. Personally, I am impressed with how they come after you every time you buy a prescription elsewhere, their good service, and the incentives they give to use them. Relative to peers, they enjoy a high margin and also benefit from various regulatory reforms. Again, being in the healthcare arena and as one with a large and increasing market share, it also provides for stability in the portfolio in addition to high potential for growth. Will revisit at the end of the year to review how this did and what 2014 may portend.
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