Shares in Medibank Private Ltd (ASX: MPL) have traded as high as $3.25 on a couple of occasions recently. Although buyers seem to be factoring in the positive impact of the recent profit upgrade on the upcoming annual results and at north of $3 investors may have unreasonable expectations for the company’s future.

As the largest player in a mature, highly competitive market, Medibank will have some troubles growing its customer numbers and market share. Additionally, the company has already cut a significant amount of costs from its operating structure – both naturally and by pressuring its supplier partners.

Investors risk paying too much for a company that can’t grow earnings except by cutting costs or taking market share – which will be difficult for the reasons mentioned above. Medibank does have a secure earnings base and a reliable dividend, but there are a number of other businesses offering better growth and bigger dividends for less – Flight Centre Travel Group Ltd (ASX: FLT) and Retail Food Group Limited (ASX: RFG) are just the first of many that spring to mind.

Retirees might be attracted to Medibank for the stability of its earnings, but if the company loses market share to competitors (a real possibility), or further cost cuts fail to materialise, shares could decline by more than you gain through earnings stability. A new CEO brings some opportunities, but there are also risks regarding regulatory intervention both in the general healthcare system and if Medibank continues pressuring its suppliers for a better deal. Long-term market watchers will remember previous interventions from the regulator into the grocery market over the pressuring of suppliers by Woolworths Limited (ASX: WOW) and Wesfarmers Ltd (ASX: WES).

I have been wrong about Medibank so far – writing at the time of its launch that it wasn’t a buy – so it’s entirely possible that I’m still wrong, but based on what I see I’m having trouble finding opportunity in the business.

Medibank is not a bad company, and if you bought it at a reasonable price (under $3) you have a margin of safety and could consider holding your shares. Investors looking to improve their total portfolio returns are better off looking elsewhere for shares to buy today.

A prime place to start would be The Motley Fool's Dividend Investor service, which has plenty of active buy recommendations (plus a new one each month!), and is handily beating the market, up 15% compared to the All Ordinaries 6.5% since its launch in 2014. Interested readers can read The Fool's latest special report, on this "dirt cheap" growth business with a fully franked dividend of over 6% simply by clicking here and entering your email address.

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Motley Fool contributor Sean O'Neill owns shares of Flight Centre Travel Group Limited and Retail Food Group Limited. The Motley Fool Australia owns shares of Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.