UBS: Buy These 2 Stocks Before US Death Rates Pick Up

funeral parlor casket coffin

Photo: Chris Hondros / Getty Images

UBS healthcare analyst A.J. Rice just initiated coverage and slapped Buy ratings on Service Corporation (SCI) and Stewart Enterprises (STEI).  These two companies operated in the funeral services and cemetary industries.Rice’s investment thesis is based on the strength of the company’s cash flows and the expectation for death rates to pick up.  From the note to clients:

“Death rate soft recently, but stable long-term: Over the last decade, the number of deaths in the U.S. was consistently flat to modestly lower Y/Y (low-single-digit declines in percentage terms). In 2011, the number of deaths was flat Y/Y. The annual number of deaths is expected to stabilise and gradually begin to increase again as the ‘baby boomers” age. For its part, the U.S. Census Bureau projects that the number of deaths will increase by roughly 1% per year, from 2.5 million in 2009 to 3.1 million in 2025.”

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