Healthcare Takes Wall Street Lead: 4 Picks

Wall Street recorded solid gains in the last trading session, with the S&P 500 and the Nasdaq Composite logging their best weekly performance since December 2011 and the Dow Jones Industrial Average posting the best weekly numbers since November 2016. These weekly gains helped all the three major indexes to end last month in green.

 

But, it was the most popular trade over the past one and a half period that has given way in November to another sector that has now taken the baton of leadership on Wall Street. The healthcare sector registered a gain of more than 6% in November, while one of the new entrants among the S&P 500’s 11 sectors, communications services that include Facebook, Inc. FB turned out to be among the worst performers in the past 30 days.

Here is a look at how the S&P 500 sectors fared in November —

 

(Source: SPDR Sector Tracker)

And this outperformance by the health-care sector that displaced the so-called FAANG stocks — Facebook, Amazon.com Inc. AMZN, Apple Inc. AAPL, Netflix Inc. NFLX and Google-parent Alphabet Inc GOOGL may not be a one-off, market pundits said.

Continuous innovation and research in the field of biotechnology and an increasingly aged population in the United States are helping whet appetite for healthcare shares.

Moreover, this particular sector is more defensive in nature compared to other major S&P 500 sectors like technology. Thus, their demand has increased by leaps and bounds as U.S. economic expansion is widely expected to slow down in the coming years owing to the waning effect of the Trump administration’s corporate tax cuts.

Also, whether the stock market is a bull or bear one, the need for medical and health care products is constant. Needless to say, most of the healthcare companies are mature firms that provide stable cash flows, encouraging profits and offer some big yields. There is plenty of growth left in their tank from new drugs in development.

4 Top Picks

With that, here are four top healthcare stocks you need to scoop up today. Such stocks have a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a VGM Score of A or B. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners.

Anthem, Inc. ANTM operates as a health benefits company in the United States. The company currently has a Zacks Rank #2 and a VGM Score of B. The Zacks Consensus Estimate for its current-year earnings moved up 1.2% in the last 60 days.  The company’s expected earnings growth rate for the current year is 30.1% compared with the Medical - HMOs industry’s expected increase of 20.2%. The stock has outperformed the broader industry in the last one-month period (+7.8% vs +6.7%).

 

HCA Healthcare, Inc. HCA, through its subsidiaries, provides health care services. The company currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings moved up 1.2% in the last 60 days.  The company’s expected earnings growth rate for the current year is 41.7% compared with the Medical - Hospital industry’s expected increase of 1.9%. The stock has outperformed the broader industry in the past month (+6.4% vs +5.6%).

 

Dr. Reddy's Laboratories Limited RDY operates as an integrated pharmaceutical company worldwide, including the United States. The company currently has a Zacks Rank #1 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings rose 6.8% in the last 60 days.  The company’s expected earnings growth rate for the current year is 40.6% compared with the Medical - Generic Drugs industry’s projected increase of 4.9%. The stock has outperformed the broader industry in the last one-month period (+15.1% vs -2.3%). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

UnitedHealth Group Incorporated UNH operates as a diversified health care company in the United States. The company currently has a Zacks Rank #2 and a VGM Score of A. The Zacks Consensus Estimate for its current-year earnings moved up 0.7% in the last 60 days.  The company’s expected earnings growth rate for the current year is 27.2% compared with the Medical - HMOs industry’s expected increase of 20.2%. The stock has outperformed the broader industry in the last one-month period (+7.8% vs +6.7%).

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Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
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Alphabet Inc. (GOOGL) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Dr. Reddy's Laboratories Ltd (RDY) : Free Stock Analysis Report
 
Anthem, Inc. (ANTM) : Free Stock Analysis Report
 
UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
 
HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report
 
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