St. Jude Medical, Inc. (STJ), Health Management Associates Inc (HMA): What If Obamacare Implodes?

Stocks in medical device makers would likely do well with a rollback of the excise tax imposed by the ACA. Several medical device companies announced layoffs last year in anticipation of this new tax. Hospitals, on the other hand, wouldn’t fare so well if Obamacare’s promise of fewer uninsured patients vaporizes.

I wouldn’t bet on any of the scenarios under which Obamacare could fall necessarily playing out. However, there are some alternatives for investors who want to be in position to benefit just in case.

St. Jude Medical, Inc. (NYSE:STJ) looks to be a good pick in the medical device sector. The company stands among the leaders in the cardiac device market with products from pacemakers to heart valves. St. Jude Medical, Inc. (NYSE:STJ) also appears to be positioned well to succeed in the rapidly growing renal denervation market. I think the stock should do well regardless of what happens, but shares would get a boost if the medical device tax fizzles away.

Playing the hospital market presents a much more difficult challenge. If Obamacare collapses, investors should avoid Health Management Associates Inc (NYSE:HMA). The large hospital systems operator recently reported disappointing results from last quarter. It was also featured in an unflattering 60 Minutes story in December that contributed to the company’s woes.

Health Management Associates Inc (NYSE:HMA) would probably be one of the stocks most negatively affected by an implosion of Obamacare. However, if the status quo for the ACA holds, most hospital stocks, including Health Management Associates Inc (NYSE:HMA), should perform relatively well.

What if?
Perhaps posing “what if” scenarios seems like a waste of time. However, every investment decision involves asking many “what if” questions, even if only subconsciously.

What if Obamacare implodes? Whether you shudder at the prospect or relish the idea, incorporating possible changes that could impact business fundamentals into your investment planning makes sense.

The article What If Obamacare Implodes? originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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