Article

2020-01-18 Economy

Healthcare stocks: Paul MacDonald's Top Picks (video)

[Bloomberg Market Call] MARKET OUTLOOK

The healthcare sector is a direct beneficiary of one of the only secular, non-cyclical and permanent investment themes: the global aging population. Moreover, as wealth increases in developing economies, there’s a disproportionate increase in the amount of spending on healthcare which will likely result in significantly increased demand for healthcare products and services over time. Finally, technological innovations coupled with regulatory advancements pave the way forward for catalysts across healthcare subsectors.

Political discussions on how to deal with the rising healthcare costs over recent years have caused volatility in the sector to increase and valuation multiples to contract. This was on display during the first nine months of 2019 as investor sentiment towards the sector worsened. Ahead of third-quarter earnings, however, there was an apparent tone shift. More positive commentary and overall sentiment towards the sector also coincided with a softening of extreme political rhetoric. This caused the sector to regain strength through the end of the year. This is poised to continue through 2020.

Still, healthcare is expected to be a key topic during the 2020 U.S. presidential election. Even intra-party views on potential policies are divergent, resulting in the advancement of even basic healthcare proposals proving to be difficult. We view any further volatility as an opportunity, as fundamentals for the underlying businesses remain intact. We continue to advocate diversity across subsectors to minimize individual binary risks.

Lastly, the increase in the implied volatility levels has resulted in attractive income derived from covered call strategies such as the one used in the Healthcare Leaders Income Fund.

Posted by Besoeker 2020-01-18 06:41|| || Front Page|| [14 views ] Top

#1 Healthcare profits will stop rising when the market cannot pay for them. The only way the market can pay for them now is by massive government intervention - wealth transfer. So far the people who get more than they pay for can continue to get it by voting for it, but 'sooner or later, you run out of other people's money.' Then the whole thing collapses.

Posted by Glenmore 2020-01-18 09:46|| 2020-01-18 09:46|| Front Page Top

#2 Healthcare stocks as a group have underperformed the SP500 since mid 2015 and they aren’t in a mode to likely outperform as of now either.

Posted by Uleck Spererong9442 2020-01-18 16:04|| 2020-01-18 16:04|| Front Page Top

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