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It is generally accepted that health care is considered one of the main defensive sectors. Given recent market fluctuations, it may be wise for troubled investors to find the market unstable to consider transferring some of their assets to the sector.
Of course, past performance is no guarantee of future performance, but it is worth looking at some of the companies that have outperformed the market since the September 2008 crash.
UnitedHealth Group (NYSE: UNH) is one of the big-cap stocks that stands out. Investors who had the foresight to invest their money at this Minnesota-based insurer more than 10 years ago saw the value of their investment increase by more than 1,000%. Shareholders are undoubtedly delighted that the company is showing no signs of slowing down. In fact, just the opposite. UnitedHealth reported a strong increase in revenue and earnings last month, but also increased its estimates of net earnings per share and adjusted earnings per share for the year.
In an article in GuruFocus on November 15, Isham Majumdar acknowledged that if UnitedHealth is competing in a crowded and competitive market, "the title seems to be a good bet in the long run." His optimism is based on the excellent management of the company and its background, among other reasons.
Amgen (NASDAQ: AMGN) is another health care company that has rewarded the faithful over the last decade. Biotech's heavyweight shares rose from around $ 55 in September 2008 to nearly $ 200 today, far outpacing the gains of the S & P 500. The resilience of the company was again demonstrated on the 20th. November. While the Nasdaq was hurt, the Amgen stock was worth $ 1.53.
Moving objects tend to stay in motion, and this certainly seems to be the case of this giant from Thousand Oaks, California, with a stratospheric market capitalization of more than $ 175 billion. The company has delivered time and time again. Its ability to continue to achieve exceptional results is enhanced by targeting diseases for which the need is greatest, including cardiovascular disease and neuroscience. The icing on the cake is Amgen's $ 5.28 dividend, a return of more than 2.7%.
While Amgen has performed well in the broader market, one of its biotech brethren has broken the doors of the S & P 500. Biogen's (NASDAQ: BIIB) shares currently cost $ 320 per share, which is more seven times the price you could have bought. them for a decade.
Biogen focuses on serious neurological and neurodegenerative diseases. The company has high hopes for a medicine against aducanumab called Alzheimer's. The drug is currently being tested in collaboration with the Japanese company Eisai (ESALY).
Late last month. Biogen said he was encouraged by the latest data from the study that the drug could slow the steady progression of the disease in patients. Of course, the study is still in its infancy and many obstacles must be removed before Aducanumab can even be considered commercially viable.
Biogen is on a tear, but its rapid growth could be more pedestrian in the coming years. Analysts expect earnings per share growth over the next five years to be about one-third that of the previous five years. In response to an email asking why analysts were predicting the slowdown, Biogen said: "We have not provided any long-term guidance and we can not comment on the accuracy of analysts' forecasts. "
Despite their growth since the crash of 2008, all companies mentioned continue to search Regeneron (NASDAQ: REGN). The shares of this biopharmaceutical company based in Tarrytown, New York, have grown by more than 1,600% over the last decade. A word of caution here. The stock, which had reached $ 557 in October 2015, has since experienced a downward trend. Insurers Humana (NYSE: HUM), Aetna (NYSE: AET) and Anthem (ANTM) also outperformed the S & P 500. Eli Lilly (LLY) also outperformed.
Of course, the sector did not experience parallel growth, and among those that delayed the growth of the S & P 500 were Bristol-Myers Squibb (NYSE: BMY), Merck (NYSE: MRK), Pfizer ( NYSE: PFE), Express Scrips (NASDAQ: ESRX), Cardinal Health (CAH) and McKesson (MCK). This is not to say that these companies may not be good defensive prospects, they have not been proven since the end of 2008.
Disclosure: The author has positions in AMGN, BMY and LLY.
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About the author:
Barry Cohen
Barry Cohen has nearly 40 years of experience in communications and marketing, primarily in senior positions in major international healthcare companies, including Abbott and Bayer Inc.
He has contributed to numerous financial websites, writing primarily on the shares of health care companies.
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