Even the best scientists in the world cannot reliably forecast drug-test results, so why should investors gamble? Quality businesses are key for healthcare stocks.
Healthcare companies are beginning to explore how artificial intelligence (AI) might unlock efficiencies for patients and medical systems. But to transform science fiction into reality, AI applications in the sector must prove that they can improve business profitability to deliver returns for investors.
Healthcare stocks have remained in vogue through volatile markets, driven by increased interest in the sector during COVID-19.
Healthcare has long been considered one of the most reliable defensive sectors—an effective portfolio buffer when equity markets turn volatile.
Growth stocks are under acute pressure as rising interest rates change the dynamics that drive equity valuations.
Disappointing returns for healthcare stocks through the market’s recovery from the pandemic have raised concerns about the sector.
Healthcare stocks are once again in focus as a result of promising news of COVID-19 vaccines. But investors shouldn’t hunt for the pandemic’s panacea. Focusing on business fundamentals is a much better way to find healthcare stocks with long-term potential than searching for the next big drug.
Healthcare stocks usually are defensive for a portfolio during market downturns. Given the extent of the pandemic’s impact, more questions are being asked about the sector’s resilience.
US healthcare is always a political hot potato, and volatility is expected to rise as the November elections approach. But investors can find good opportunities in the sector in companies with strong long-term business drivers that are relatively immune to political noise.
Healthcare stocks served as powerful painkillers during last year’s market declines. Yet the sector offers much more than just downside protection for investors who focus on business potential and resist the urge to predict scientific breakthroughs.
Harnessing the potential of Big Data will be a major factor in the future of healthcare. And some of the greatest innovations in the sector’s future may not come from companies in healthcare, but from technology companies.
While many investors in healthcare stocks may try to focus on predicting scientific outcomes, we take a different approach. We look at the return on invested capital (ROIC), and that’s how we find opportunities.
