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HEALTH CARE STOCKS
Even with the run-up in health care stocks in recent years, it's not too late for investors to add a dose of drugmakers, hospitals or related companies to their portfolios for 2016, experts say.
But that's not to say there aren't pitfalls to watch out for. Here are five tips on health care investing from investing gurus.
In the health care sector and other industries, Brian Hennessey, a portfolio manager with Alpine Woods Capital Investors in Purchase, New York, looks for companies that have good secular earnings drivers, solid balance sheets and strong cash-flow generation that allow them to pay and grow dividends. Long-term contracts with customers and suppliers and solid management teams that can grow cash flows and dividends are good signs, he says.
Hennessey likes pharmaceutical companies that have patent protection on drugs and biotech companies that have matured enough to essentially be pharmaceutical companies. In addition to hospitals, he likes drug-related services companies like Cardinal Health (ticker: CAH), McKesson Corp. (MCK) and AmerisourceBergen Corp. (ABC). He also likes pharmacy benefits managers like CVS Health Corp. (CVS).
