By Takeover Analyst:Some of the most attractive defensive plays can be found in the healthcare sector where demand is inelastic and revenue streams are sustainable. The Street is currently bullish about Aetna (AET), UnitedHealth Group (UNH), and WellPoint (WLP), rating them either a "buy" or higher. Based on my review of the fundamentals and multiples, I find that Aetna will outperform United - despite a contrary consensus.
From a multiples perspective, Aetna is substantially cheaper than United. It trades at a respective 8.7x and 8x past and forward earnings while United trades at a respective 11x and 9.6x past and forward earnings. Aetna's PE multiple is also 80% of the 5-year average, indicating a comfortable room for expansion. In terms of free cash flow yield, WellPoint leads by this metric at 11.1%.
At the fourth-quarter earnings call, United's CEO, Stephen Hemsley,
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