Stocks That Are Soaring On The Back of Healthcare Bill (AET, CI, WLP)

According to an article on SmartMoney, the three healthcare companies that are seeing major gains in the stock market and may still continue to do so if the Senate bill becomes a law are:

Aetna (BYSE: AET) provides health insurance products and related services. Since AET is focused on providing workplace health plans, it lost business to unemployment in 2009. After news of insider buying of Aetna’s stocks and all 40 Senate Republicans opposing the Senate bill, AET’s shares gained 5% on December 21. Moreover, the company’s stock has gained 31% since October. However, the stock is still trading at just 12 times earnings, which is a discount of about 40% to the broad stock market.

Cigna (NYSE: CI) operates in five segments, Health Care, Disability and Life, International, Run-off Reinsurance and Other Operations. As CI has limited exposure to areas that are targeted for big cuts, it is likely to lose less than other insurers from the healthcare reform process. Cigna’s shares climbed 4% after the Monday news. CI’s shares are trading at just nine times earnings.

Wellpoint (NYSE: WLP) has recently sold its prescription benefits management business to Express Scripts. As a result and due to WLP’s free cash flows, McDonald, an analyst at Oppenheimer, expects WellPoint’s cash to exceed $6.6 billion by end 2011. With pending changes to the Senate bill likely to prove beneficial to insurers and WLP’s shares trading at just 10 times earnings, the future looks bright for the stock.