​WageWorks: Health Savings and Benefit Plans

MoneyShow  |

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WageWorks (WAGE) is a leading on-demand provider of tax-advantaged programs for health and other employee spending account benefits, known as Consumer-Directed Benefits, in the United States, explains growth stock expert Todd Shaver, editor of BullMarket.com.

Why does the everyday working person love WageWorks? The Consumer-Directed Benefits programs enable employees and their families to save money by using pre-tax dollars.

Who doesn’t love to save on taxes? Employers financially benefit from the programs through reduced payroll taxes, even after factoring in fees.

WageWorks is the provider of choice to many of the nation’s largest and most innovative companies including 68% of the Fortune 100 and 55% of the Fortune 500.

The company’s early stage penetration of the health savings account (HSA) market represents one of the most visible growth drivers over the next three years. HSAs represent between 20% and 25% of WAGE’s health care accounts.

We recommend WageWorks based on trends favoring consumer-directed benefits and increasing participation rates, the likelihood of accretive acquisitions, new channel partnerships, opportunities presented by private and public health care exchanges, and the company’s unusually high degree of revenue visibility.

By revenue visibility, we mean that over 80% next year sales are booked at the beginning of the year due to the nature of contracts with employers so the company’s revenue outlook is far less surprising than most companies.

The company’s early stage penetration of the health savings account market is a lucrative opportunity we are excited about. There is so much potential here from secular growth in HSAs, to accretive acquisitions, or to even a take-out.

The company has more room to go until it captures greater than an 80% share of the Fortune 100 and Fortune 500. We think this company ultimately gets bought for a big valuation.

With EPS closing in on $2, valuation is not cheap but that is not a problem for us as we see the stellar growth opportunity to be worth paying up for.

Todd Shaver is founder and editor in chief of BullMarket.com.

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About MoneyShow.com: Founded in 1981, MoneyShow is a privately held financial media company headquartered in Sarasota, Florida. As a global network of investing and trading education, MoneyShow presents an extensive agenda of live and online events that attract over 75,000 investors, traders and financial advisors around the world.

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