Those who follow health care stocks know: Because many firms have operations overseas, a stronger dollar can weigh down profits. A shrinking industry and the efforts of individuals to make more-economical health care choices also can sap profits. But have you considered that what’s essential to your health might be healthy for your investments, too?
“Investors stand to do better in health care stocks [than some other industries] for several reasons,” says Pam Krueger, who is co-host of “MoneyTrack” on public television. The demand for medicines, devices and treatments and an aging population counter the aforementioned, in her opinion. Krueger likes Genzyme (NASDAQ: GENZ; Price: $54) because it develops expensive, high-demand medicines for rare genetic diseases. The company also is expanding into stem cell treatments for cancer.
Joshua D. Strauss of Appleseed Fund likes the sector, too. “[V]aluations are at rock bottom levels,” he says. He likes Pfizer (NYSE: PFE; Price: $15.92) in part for its current low valuation. PDI (NASDAQ: PDII; Price: $5.06) is another company that he favors. PDI specializes in helping health care companies to reduce sales-force costs. It garnered $18 million in new contracts last quarter. Appleseed has 4.3 percent of its mutual fund invested in PDI.
Dusty Culbertson of Bastiat Capital deems Teva Pharmaceutical (NASDAQ: TEVA; Price: $51.59; available as an ADR) a “buy-and-never-sell” stock. It “dominates the generic arm of the pharmaceutical industry,” he says.