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Two Ways: Humana's Sickeningly Good Quarter


Strengthen your portfolio in good times and bad.


A Blowout Quarter for Humana

Earnings at Humana (HUM) spiked in the first quarter as the company benefited from higher premiums and Medicare health plans for seniors. Net Income rose to $205.7 million, or $1.22 per share, compared with $80.2 million, or $0.47 per share, a year earlier. According to Reuters, analysts were expecting $1.14 per share. Revenues increased 10.8% to $7.71 billion.

The company's Medicare Advantage membership jumped 16% year-over-year, while lower claims expenses for its prescription drug plans and implementation of premiums also helped results. And despite fears of health care reform, the insurer raised its full year earnings outlook to between $6.10 and $6.20 per share. This bests its previous projection of $5.90 to $6.10 per share.

From the Bull Pen: With fear over swine flu taking hold, one can look to healthcare plays for upside exposure. The diversified ishares Health Care ETF (IYH) may be a prudent option rather than chasing Humana itself; a sell stop can be set below $30-$31 depending on one's risk profile.

From the Bear Cave: Restaurant stocks are likely to come under pressure this morning. One can look to Chipotle Mexican Grill's (CMG) pattern of island reversal. A buy stop can be set 2% above entry.

Quick Check Around the World

Asian trading closed with the Hang Seng -2.74%, Nikkei 0.21%, India 0.38%, Shanghai -1.77% and Taiwan -2.99%.

Glancing towards Europe, we see the CAC -1.35%, DAX -0.96%, FTSE -0.58%

As of 8:10 AM EST, S&P Futures are trading -17 to 849.00, and Nasdaq futures are -21 to 1353.00.

A Look at Commodities

Over in commodities, crude oil is trading -2.62 to 48.93 while gold is -0.7 at 912.30 this morning. Silver is +0.100 to 12.990 and copper -7.80 to 197.25.

The dollar index is +0.5350 to 85.4550.

No economic events today but click here for the full trading radar.

Welcome back, Minyans. Good luck today.

In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.

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No positions in stocks mentioned.

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