Governments are scrambling to rein in runaway health care costs, and many are turning to managed-care companies like Centene (CNTE) for help.
Serving Indiana, Texas and Wisconsin, Centene signs up medicaid, supplemental security income and state children's health insurance recipients for its managed care services. Centene has more medicaid members (medicaid is the fastest-growing component of most state budgets) than any other managed care company in the U.S.
Michael Corbett, manager of the winning Perritt Micro Cap Opportunities fund (three-year annualized return, 12.8%), is bullish on small but fast-growing companies in the health care sector and has recently added shares of Centene.
Corbett will only buy a stock if he believes it's undervalued. Centene is debt free, while its return on equity is a sizable 13%. Last September the company posted its 13th consecutive quarter of increasing profitability. The stock trades at just over ten times the 2003 consensus earnings estimate of $2.53 per share.
