Healthcare insurers were flashing bullish signs long before merger mania engulfed the sector said Marc Chaikin, CEO of Chaikin Analytics. ‘Stocks like Anthem Health, Cigna, Aetna, Centene, Community Health and Health Net have had bullish Power Gauge ratings for over a year,’ said Chaikin, referring to his quantitative stock-picking model. ‘Suddenly the acquirers are seeing the value that the model was looking at because the factors underlying the model were very bullish.’ The Power Gauge Rating is the centerpiece of Chaikin Analytics and attempts to indicate where a stock is headed over the next three to six months. On the bearish side, Chaikin said a number of internet and e-commerce names are flashing red. ‘Stocks like Baidu in China, Yahoo!, Yelp, Zillow, LinkedIn and Twitter all have bearish Power Gauge ratings and there is a good reason for it,’ said Chaikin. ‘The financial metrics, which is what a Warren Buffett would look at, comprise 35% of our model. Things like free cash flow, price-to-sales, price-to-book and return on equity are all relatively expensive for these stocks. They are not making any money at all, or sell at high price-to-sales ratios.’
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