David Sterman

We're just weeks away from a major legal ruling that will spell profit or loss for investors in health care stocks.

Will the Supreme Court rule that the Obama administration overreached when it radically revamped the healthcare landscape? Or will it let the new health care legislation -- formally known as the Patient Protection and Affordable Care Act, but best known as "Obamacare" -- stand?

Right now, the outcome is likely a toss-up. Plaintiffs scored some solid points in front of the Supreme Court justices a few months ago. But those justices may err on the side of caution and let the health care changes stay intact.

According to Intrade.com, 57.6% of polled respondents think the Supreme Court will turn back the legislation. Even if they don't, however, a change of control in the White House this fall could also spell the end of Obamacare.

Whatever the Supreme Court decides, some companies will emerge as winners, others as big losers. But it's all about knowing which will be which. And now's the time to adjust your investment stance to prepare for possible setbacks to this far-reaching legislation.

Hospital Chains Impacted Greatly

To understand the impact of the Supreme Court's looming decision, you have to step back and see how investors had been positioning their portfolios for coming changes to the healthcare landscape.

Who would benefit the most from Obamacare, according to Wall Street analysts? Companies that run for-profit hospital chains.

Hospitals have faced a perennial problem:  People that are uninsured tend to avoid seeking medical attention when a problem initially appears, and instead wait until it blooms into a major problem. At that time, they head to the emergency room, which is always costly.

Yet many of these same uninsured people lack the ability to pay for the large hospital bills that often ensue. So hospitals treat them, but then have a hard time collecting the money.

David Sterman

David Sterman has worked as an investment analyst for nearly two decades. He is currently an analyst for StreetAuthority.com

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