There’s a lot of uncertainty in the air over policies being proposed in Washington D.C. these days, and one of those policies with huge potential to affect business (and hence stocks) is the so called Health Care reform bill.

While it’s impossible to say for sure what the exact effect of a government take over of the health care industry would be, SmartMoney suggests that these 3 stocks are at least worth considering since they are more dependent upon larger health care trends than what Washington decides.

McKesson Corporation (MCK)

McKesson Corporation provides supply, information, and care management products and services for the healthcare industry. The corporation encompasses two divisions – Distribution Solutions and Technology Solutions. The Distribution segment distributes proprietary drugs, surgical supplies and equipment, and health and beauty care products to North America as well as providing consulting and outsourcing services for biotech and pharmaceutical manufacturers.

The Technology Solutions segment provides software solutions for clinical, patient care, financial, supply chain, and strategic management. It also provides software for pharmacy automation for hospitals as well as clinical auditing, and compliance management software.

McKesson is headquartered in San Francisco, but serves home care providers, physicians, hospitals, and retail pharmacies in North America, the U. K. and other European countries, and Asia.

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Teva Pharmaceutical Industries (TEVA)

Headquartered in Israel, Teva Pharmaceutical Industries develops and produces generic and branded pharmaceuticals, active pharmaceutical ingredients and biogenerics worldwide. R&D efforts are focused on therapies for diseases like multiple sclerosis, cancer, Parkinson’s and autoimmune diseases. Teva’s product list includes Copaxone and Azilect for treating MS and Parkinson’s disease. Through its acquisition of Barr Pharmaceuticals Inc., Teva added pharmaceutical products for women’s health to its list.

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Rehabcare Group Inc. (RHB)

RehabCare Group is headquartered in Missouri and provides rehabilitation program management for hospitals, outpatient facilities and skilled nursing facilities in the United States. These program management services are specialized for rehabilitation from strokes, orthopedic conditions, and head injuries,cancer, heart failure, burns, and wounds. Rehabcare Group owns and operates five long-term acute care hospitals and six rehabilitation hospitals.

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These stocks provide a nice diversification into the medical supply side, pharmaceuticals and long term care. Each of these healthcare segments is poised to experience signifiant growth as boomers continue to age.

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This is the 3rd and final installment of the Healthcare Stocks Ripe for Growth series.Yesterday was medical records processor, Quality Systems and the week before that was Biotech company Gilead Sciences. This week we finish the series with a supplier of robo-surgery equipment, Intuitive Surgical.

Intuitive Surgical (ISRG).

Intuitive Surgical is an $875-million-a-year business that produces the da Vinci Surgical System which let surgeons operate by manipulating robotic arms while seated at a control console. The robotics allow for a more precise procedure, resulting in smaller incisions which result in less physical trauma to the patient and faster recovery times. All of that means lower costs as well.

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While the share price of Intuitive Surgical has fallen from its recent high due to concerns over hospital buying power during the recession, the 2nd quarter profits were 22% higher than the previous year.

Competition.
What competition? Intuitive Surgical acquired their only rival in 2003, producing a de facto monopoly. De facto because there isn’t anything keeping new competitors from diving in, except the startup costs. But in the meantime, the lead time Intuitive Surgical a big head start on building market share.

Growth story.
The da Vinci System is primary used for prostectomies and hysterectomies currently, but it’s a relatively new technology. So as doctors gain experience with robotic surgery and the systems gain acceptance in the healthcare community, other types of procedures will be added.

Income.
Intuitive Surgical generates a lot of cash from sales of accessories and replacement parts for its 1,100+ systems. Each machine generates between $100,000 to $150,000 every year. Almost half of the company’s 2008 revenue was from these recurring costs, and that percentage continues to rise. This, coupled with 0 debt and $902 million in cash, makes it a solid company with high growth potential.

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This is a continuation of the Healthcare Stocks Ripe for Growth series this week. Yesterday, I profiled the Biotech company Gilead Sciences. This week is the medical record keeper, Quality Systems.

Quality Systems (QSII)

Regardless of whether the Obama administration gets public healthcare legislation passed, one thing you can count on is a bigger focus on improving healthcare technology and efficiency. In fact, $29 billion of the $787 billion spending plan enacted by congress shortly after the president’s inauguration was earmarked specifically for such healthcare improvements.

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The growth story.
It’s no surprise that since then, Quality Systems has risen in price about 63%!

Given that kind of run up in price, it’s likely that a large amount of the return has already been realized, but it is still a solid company in a growth sector. Anyone who’s been to the doctor’s office and seen the wall of folders housing patient records knows that there is still a lot of information yet to be digitized.

Quality Systems is one of the big players in the fledgling industry and is therefore in a good position to capture a large market share and benefit from the government’s efforts to cut medical costs and increase the use of technology.

In good shape, financially.
The financial’s seem to be in good shape as well. The are already profitable, have a 30% profit margin, no debt and $78 million in cash. The stock also sports a $1.20 annual dividend, about 2.3% yield. Analysts expect profits to grow 11% for 2009, and 30% for 2010 – and that’s before the bulk of the money from tax payers kicks in.

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Healthcare may not seem like a great investment right now, with all the talk of a government take over of the industry, but sometimes those are just the times that create great contrarian opportunity.

Today, I’m profiling 3 healthcare sector stocks that show promise of growth in the coming years, regardless of the decisions in Washington D.C..

If you’re looking for some growth stocks in the healthcare sector, then these may be just the ones. Just be sure to do your due diligence and homework before you buy. This is presented for general informational purposes only.

First up is a biotech stock, Gilead Sciences.

Gilead Sciences (GILD) has managed to make weather the recession quite well so far, and has managed to maintain much of its profits. It may be due to the fact that GILD specializes in HIV pharmaceuticals, and many of their customers need that medication to survive.

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The company posted 31% profit increase for Q2, 2009. This increase was due mostly to Truvada and Atripla, which are once-a-day HIV treatments. Those two pharmaceuticals alone contributed $3.7 billion in sales last year, which is almost 72% of Gilead Sciences’ total sales.

Gilead has a serious economic moat as well, since they own 71% of the U.S. HIV drug market. They are on track to grow sales even more once Atripla is approved for European markets.

Diversification.
Gilead is taking steps to diversify through acquisitions of other pharma companies. They acquired CV Therapeutics (maker of a chronic angina treatment) and Myogen (maker of Letairis, a hypertension treatment) in the past two years. With these acquisitions alone, Gilead now has a presence in the cardiovascular drug market.

On solid ground.
Even after those acquisitions, Gilead Science still has almost $2.9 billion in cash. It also has a development pipeline and no soon-to-expire patents, something some larger pharma companies are struggling with.

The stock currently trades around 18 times this year’s expected earnings.

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Here are 3 small cap stocks that you probably haven’t heard of, but they each have at least a 25% increase in sales over last year – a time in which most companies have seen sales take a big hit.

K12.

Market Cap: $548 million
Estimated sales growth for current year: 26%

K12 (LRN) provides online high school courses for home schooled children. Almost half the states in the U.S. have approved their curriculum for use in online public schools. Enrollment for U.S. students is free, but foreign students pay to enroll. The stock currently trades at 30 times estimated 2009 earnings, but in this “Great Recession”, stocks with this kind of growth are rare.

Health Grades.

Market Cap: $133 million
Estimated sales growth for current year: 31%

Health Grades (HGRD) provides information on doctors, hospitals and nursing homes to patients. The information even contains ratings from past patients. Visitors to the company’s web site (HealthGrades.com) can access basic information in exchange for giving their own opinion of their doctor. More detailed reports can be purchased for around $13 and the company also receives fees from hospital marketing services. The majority of sales are currently to hospitals, although sales to patients is growing more rapidly.

Though the share price of Health Grades is up 80% this year, it trades around 20 times estimated 2009 earnings.

InterDigital

Market Cap: $937 million
Estimated sales growth for current year: 32%

InterDigital (IDCC) licenses high-speed data transfer technology to cell phone makers. They’ve had some legal disputes with Nokia, but analysts think things will be settled by a licensing deal with Nokia. InterDigital holds $6 per share in cash, and expects $3 per share in payments form Samsung. Shares are trading at 14 times estimated 2009 earnings.

Obviously, small cap aggressive growth stocks carry much more risk than large cap stocks and broad based index funds. But then, they also carry the potential for much higher return. Just do your research and know what you’re buying.

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