The most sweeping health-care bill in a decade has gained Congress’s approval and awaits the president’s signature. If Monday’s stock market trading is a reliable signal, drug makers stand to gain more than they lose from the changes; the outlook for insurers is less clear; and hospitals are among the sector’s biggest winners.

Shares of Pfizer (PFE) and Bristol-Myers Squibb (BMY) rose more than 1% Monday, while shares of insurers Aetna (AET) and Cigna (CI) rose less, and those of insurers like WellPoint (WLP) that specialize in Medicare services posted modest losses. Hospital owners enjoyed the healthiest gains, with Tenet Healthcare (THC), Community Health Systems (CYH) and Health Management Associates (HMA) each rising more than 6%.

Health plans stand to gain new members from the nation’s 32 million uninsured, many of whom will have to buy coverage by 2014 or face fines, but plans will also be scrutinized for the gap between what they collect in premiums and pay in benefits. Drug makers might find newly insured patients more willing than uninsured ones to buy expensive medicines, but the pharmaceutical industry will also likely pay higher taxes and still face looming patent expirations and a dearth of new drugs. Hospitals will lose some federal assistance, but more of the patients they treat will have insurance, which will leave hospital owners with far fewer unpaid medical bills.

For investors, Monday’s trading activity doesn’t necessarily mean hospital stocks are more promising than drug makers. America’s major drug makers pay handsome dividends, with yields ranging from 3% to more than 5%, and most hospital companies pay no dividends, preferring to spend profits on acquisitions. Also, drug stocks are cheaper relative to recent results; a quick scan of large, medium and small companies in the S&P Composite 1500 index shows that major drug makers have a median trailing price/earnings ratio of 10, versus 18 for health care facility companies (including operators of clinics and laboratories). Whether that discount will offset the revenue loss from future patent expirations is uncertain. For investors who are more interested in recent price momentum than modest valuations, here’s a quick look at three of Monday’s star hospital stocks.

Tenet Healthcare

Monday’s gain: 9%
Forecast 2010 sales: $9.4 billion
Forecast 2010 P/E: 29

Tenet Healthcare says it spends about $1 million each day throughout its 50 or so hospitals to provide care for the uninsured. As one analyst puts it, that’s $365 million of pure cash flow, about one-third of the company’s yearly total. The stock has climbed more than sixfold in value in a year, but that’s perhaps owed more to the company averting disaster than to the prospect of health-care reform. Like many hospital operators, Tenet carries plenty of debt, and at the darkest point of the recent financial crisis, some on Wall Street questioned whether high unemployment and consumer distress would leave hospitals unable to cover their costs. New management at Tenet has since helped the company reduce costs and risks. Shares look pricey relative to this year’s expected earnings of 22 cents a share, but they seem more affordable relative to sales; continued progress in the company’s turnaround plan would likely boost profit margins and justify the stock price.

Community Health Systems

Monday’s gain: 6%
Forecast 2010 sales: $13 billion
Forecast 2010 P/E: 14

Community Health Systems is the nation’s largest publicly traded hospital company, with 122 hospitals in 29 states. The firm’s reported earnings have consistently topped forecasts over the past year. Management says it has negotiated 5% to 7% price increases for this year with nearly all of its managed care payers and that a slight increase in Medicare rates should offset a slight decline in Medicaid rates. Wall Street expects company profits to increase 13% this year. Under the new health-care bill, Community Health will likely accept smaller profits for its Medicare business but will gain far more from smaller uncompensated care expenses.

Health Management Associates

Monday’s gain: 11%
Forecast 2010 Sales: $5.1 billion
Forecast 2010 P/E: 16

“One trillion dollars coming into health care is bound to help us somehow,” said Kelly Curry, chief financial officer at Health Management Associates, according to an Avondale Partners analyst who met with company management earlier this month. The stock’s outsized jump Monday suggests investors agree. Health Management, which operates chiefly in rural markets and small cities with limited competition, owes plenty and has struggled with poor financial performance in recent years. A new management team installed last fall is focused on reducing costs by buying supplies from fewer vendors, for example, and on improving emergency room efficiency. Wall Street apparently likes what it sees. Four investment banks have switched from neutral opinions on the stock to buy recommendations since November.

Jack Hough is an associate editor at SmartMoney.com and author of “Your Next Great Stock.”

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