The Zacks Medical - Outpatient And Home Healthcare industry comprises companies that provide ambulatory care in an outpatient setting or at home. These companies utilize advanced medical technologies for diagnosis, observation, consultation, treatment and rehabilitation services.

The industry participants also include operators of HMO medical centers, kidney dialysis centers, freestanding ambulatory surgical units, emergency centers and other outpatient care centers.

Here are the three major industry themes:

Zacks Industry Rank Indicates Encouraging Prospects

The Zacks Medical - Outpatient and Home Healthcare industry falls within the broader Zacks Medical sector. It carries a Zacks Industry Rank #92, which places it in the top 37% of more than 250 Zacks industries.

The groups Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.

We will present a few stocks that have the potential to outperform the market based on a strong earnings outlook. But its worth taking a look at the industrys shareholder returns and current valuation first.

Industrys Stock Market Performance

The industry has underperformed both its sector and the Zacks S&P 500 composite in the past year.

The industry has lost 14.9% over this period against the S&P 500s rally of 29.3% and the broader sectors increase of 10% in the same timeframe.

One Year Price Performance

Industrys Current Valuation

On the basis of the forward 12-month price-to-earnings (P/E), which is commonly used for valuing medical stocks, the industry is currently trading at 19.65X compared with the S&P 500s 18.67X and the sectors 21.66X.

Over the last five years, the industry has traded as high as 20.26X and as low as 14.67X, with the median being at 17.87X, as the charts below show.

Price-to-Earnings Forward Twelve Months (F12M)

Price-to-Earnings Forward Twelve Months (F12M)

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Bottom Line

Technological advancement has led to simplification of procedures related to outpatient services and also made them less time consuming. Participation in alternative payment models also plays a major role.

Here are three stocks that either have a Zacks Rank #1 (Strong Buy) or 2 (Buy), which investors can take a look at. These stocks are also well positioned to grow in the near term. You can seethe complete list of todays Zacks #1 Rank stocks here.

Amedisys, Inc. (AMED): Amedisys provides home health and hospice services throughout the United States to the growing chronic, co-morbid, and aging American population. The stock sports a Zacks Rank of 1.

For this Baton Rouge, LA-based company, the Zacks Consensus Estimate for 2019 revenues indicates an improvement of 18.5%. It has an average positive earnings surprise of 21.1% in the trailing four quarters.

Price and Consensus: AMED

DaVita Inc. (DVA): DaVita is a leading provider of dialysis services in the United States to patients suffering from chronic kidney failure, also known as end stage renal disease (ESRD). Its services include outpatient dialysis services, hospital inpatient dialysis services and ancillary services such as ESRD laboratory services and disease management services. The stock sports a Zacks Rank #1.

For this Denver, CO-based company, the Zacks Consensus Estimate for 2019 earnings suggests growth of 48.7%. It has an average positive earnings surprise of 8.1% in the trailing four quarters.

Price and Consensus: DVA

Hanger, Inc. (HNGR): The company delivers orthotic and prosthetic (O&P) patient care, and distributes O&P products and rehabilitative solutions. The company manages O&P networks, and provides therapeutic solutions to patients and businesses in acute, post-acute, and clinic settings in the United States. The stock carries a Zacks Rank of 2.

For this Austin, TX-based based company, the Zacks Consensus Estimate for 2019 revenues indicates an improvement of 4.7%. The consensus mark for 2019 earnings indicates an increase of 15.4%.

Price and Consensus: HNGR

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Click to get this free report

Hanger Inc. (HNGR) : Free Stock Analysis Report

DaVita Inc. (DVA) : Free Stock Analysis Report

Quest Diagnostics Incorporated (DGX) : Free Stock Analysis Report

Amedisys, Inc. (AMED) : Free Stock Analysis Report

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Rosy Outlook for Outpatient and Home Healthcare Industry - Yahoo Finance