A Healthy Portfolio Is Heavy in Health Care

by Jeff Reeves | September 22, 2012 7:00 am

There are very few things that are certain in life. Growing old is one of them.

So investors would be foolish to ignore the massive demographic shift and growth potential that is boosting health care stocks right now. From large-cap insurers and Big Pharma to beginning-stage biotech stocks and medical-waste small caps, there is tremendous opportunity out there in the health care sector.

Consider that Eli Lilly (NYSE:LLY[1]) might have developed an Alzheimer’s treatment[2] to keep dementia in its early stages from worsening. Consider that Merck (NYSE:MRK[3]) might have a home run in its new brittle-bone drug[4] that will prevent fractures in the elderly.

These are not only great developments for the health of Americans — they also are going to be big moneymakers going forward.

And beyond the growth in health care as baby boomers age and need more care, there’s also the recession-proof nature of the sector. After all, people don’t stop going to the hospital or cancel their prescriptions just because of a downturn in the stock market or the broader economy.

I have written many articles on this topic, and will write many more in the months and years to come. But always keep this in mind generally: There is no industry as low-risk and as high-reward as health care.

I’ll leave you with this quick list of health care players hitting 52-week highs right now as proof of the breadth and power of the sector:

• Cubist Pharmaceuticals (NASDAQ:CBST[5]): Small-cap biotech, +25% YTD
• Covidien (NYSE:COV[6]): Blue chip that makes medical devices, +33% YTD
• Gilead Sciences (NASDAQ:GILD[7]): Large-cap biomedical stock, +66% YTD
• HealthSouth (NYSE:HLS[8]): Outpatient therapy and rehab company, +39% YTD
• Jazz Pharmaceuticals (NASDAQ:JAZZ[9]): Small-cap biotech, +38% YTD
• Eli Lilly (NYSE:LLY[1]): Big Pharma powerhouse, +15% YTD
• Medtronic (NYSE:MDT[10]): Large-cap medical technology company, +13% YTD
• Merck (NYSE:MRK[3]): Another Big Pharma player, +19% YTD
• Peregrine Pharmaceuticals (NASDAQ:PPHM[11]): Clinical-stage biotech, +405% YTD
• Pfizer (NYSE:PFE[12]): Pharmaceutical heavyweight, +14% YTD
• Sanofi (NYSE:SNY[13]): Global drugmaker and a big Buffett stock, +23% YTD
• Steris (NYSE:STE[14]): Small cap focused on medical waste, +19% YTD
• Tenet Healthcare (NYSE:THC[15]): Health care services company, +22% YTD

Get the idea?

Good. Now go buy at least two health care stocks and call me in the morning.

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.”[16] Write him at editor@investorplace.com or follow him on Twitter via@JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

Source URL: https://investorplace.com/2012/09/a-healthy-portfolio-is-heavy-in-health-care/

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