Which Penny Stocks Will Profit from Obama’s Health Plan?

There are few industries that have made people as much money as healthcare. Health stocks ― especially small-caps ― tend to go from being below the radar to above expectations in the blink of an eye. Those who had the foresight to get in early have the chance to end up with a windfall... 

There are also few industries whose fates are as directly linked to Uncle Sam. Healthcare, biotech, and medical stocks live and die by Federal health budgets, and with Obama's official health plan released to the public not so long ago, millions of investors are wondering just how the plan will affect shares of their favorite companies.

In the penny stock realm, it gets even more interesting...

In President Obama's budget, he outlined three areas where public dollars will be used to fuel sales at private companies: the implementation of health IT, medical research, and Medicare spending.

Health IT was a hot topic during the election, and it continues to draw Federal dollars now that Obama's in office. "We will make sure that every doctor's office and hospital in this country is using cutting edge technology and electronic medical records so that we can cut red tape, prevent medical mistakes, and help save billions of dollars each year," said the President.

He's following up on that by providing $19 billion in tax dollars to help hospitals go digital.

And in kind, companies that provide electronic medical record technologies (most of whom are small-caps) are seeing increased interest from investors. Two small-cap stocks that have benefited from that interest include Quality Systems (NASDAQ: QSII), up 33% in the last month, and Patriot Scientific (PTSC.OB), up 20% in the last three weeks.

Medical research is another area where small-cap stocks are seeing a resurgence of interest. There are scores of pharmaceutical penny stocks that are researching and developing the latest drug treatments for everything that ails us, and they're poised to tap into the $1.1 billion in government funding for researching medical treatment effectiveness.

Over at Penny Stock Fortunes, subscribers are seeing the effects of that money first hand. Today, they had the chance to unload shares of Dendreon (NASDAQ: DNDN) for 255% gains (to find out more about that play).

While DNDN may have been one of the bigger gainers, a number of other tiny pharmaceuticals have been up double digits this year as well.

Medicare is the final place where Uncle Sam's health dollars could trickle down to your portfolio. You see, most private healthcare and health insurance companies bill Medicare for services provided to patients it covers. Included in the mix are a number of small-cap names ― WellCare (NYSE: WCG) and Amerigroup (NYSE: AGP), for example.

When the government commits to expand Medicare funding, it means big things for these Medicare contractors. Not only do they have the chance to increase volume by admitting more government-sponsored patients, but they become ripe targets for acquisitions by larger health insurers like UnitedHealth Group (NYSE: UNH).

Want to make money on healthcare stocks? Invest your money where the government's spending theirs, and your chances of profiting from penny stocks are unquestionably higher.