| Stock (Symbol) | Stock Price | |
Catalyst Health Solutions (CHSI) |
$51 |
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| Data is as of | Expected to Report | Sector |
December 14, 2011 |
Feb 20 |
Healthcare |
| Sharek’s Take | ||
 2012 will be a year of spending for Catalyst Health Solutions (CHSI). The company’s Invest Now program will:
The result is lower EPS — for now. CHSI purchased FutureScripts from Independent Blue Cross last year and Walgreens’ (WAG) PBM unit this year. The Walgreens’ PBM should increases its customer base from 7 million to 18 million. 2013 is the year to expect profitability from the WAG business, in 2012 CHSI will have to spend to grow. |
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| One-Year Chart | ||
 CHSI is towards the bottom of its range on the one-year chart. The P/E is 19 is good because the stock is worth 25 times earnings (more below).Profit growth has been solid all year and Estimates show 20% ad 24% growth coming the next two quarters — these estimates just declined because of Invest Now, so that’s still respectable growth considering CHSI is spending. |
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| Earnings Table | ||
 CHSI grew profits 31$ last quarter on an 54% gain in sales. Revenue growth should continue to be strong through next June due to the mergers.CHSI beat by 2 cents but you can’t place a lot of weight on CHSI’s beat-the-street record. The company often lowers or misses estimates as it grows. Annual Profit Estimates fell due to the higher spending. Now 2012 profit growth is expected to be 15%, which is lower than usual. 22% growth is expected in 2013. Quarterly estimates still look good even with the additional expenses. mid-20s growth is expected the first two quarters of 2012. |
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| Fair Value | ||
 As the ten-year chart below shows, this company has consistently grown profits at 25%, so I’m comfortable with a 25 P/E for CHSI. |
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| Ten-Year Chart | ||
 Catalyst used to be HealthExtras (HLEX). I purchased HLEX for the Growth Portfolio at $14 on 5/4/2004.The ten-year chart shows this is a nice pullback to buy into this stock. The company has had profit growth each year during the decade — never a down year in profits. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
11 of 20 |
Catalyst Health Solutions will be planting and plowing next year to keep growing in 2013 and beyond. Still, the additional expenses haven’t hurt expected profit growth too much. This stock is undervalued and has proven to be a great long-term investment. CHSI is ranked 11th in the 20 stock Growth Portfolio Power Rankings. CHSI isn’t in the Aggressive Growth Portfolio. |
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Aggressive Growth Portfolio
N/A |
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