Feeling lucky? The Wall Street Journal recently ran an article suggesting investors take a look at health care stocks. The article makes the argument that an aging population and potential congressional mandates for people to buy health insurance make the health care sector a decent place to look for some growth in the medium to longer term. Politically, it’s impossible to read the tea leaves. However, could the story be on to something?
Political Risk
Obviously, the biggest risk or potential reward for health care stocks is health care reform being debated in congress (and main street) right now. President Obama has stepped back on his rhetoric demanding a public options in the recent past, but health care reform remains a top priority. Benjamin Graham would say the rest time to invest in a sector would be when investor sentiment has run the other way. I actually prefer a Baron Rothschild quote for this situation: “The time to buy is when there’s blood in the streets.”
Maybe the time is now to pick up some shares of health care stocks. Even if you can’t stomach the idea of investing in insurers, perhaps you could invest in drugmakers like Pfizer PFE or some alternative health care play stocks like the article’s mention of the drug store chain CVS Caremark CVS. Both are beating the S&P over the last year, which may mean there is less safety built into their prices, but both are strong companies which pay dividends (Pfizer’s is more solid, at almost 4%).
Take a look at some health care stocks, this might be your opportunity to pick up some solid companies for a good price.
I don’t currently own PFE or CVS.
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