Sometimes it's important to see the forest through the trees. Right now, when the country is consumed with pending changes to our health care system, veteran industry analyst and strategist Les Funtleyder's view of the sector is brilliant in its simplicity.
"Eight thousand people turn 65 every day," the managing director at Poliwogg says in the attached video."Health care is a good place to be, approaching a great place to be," he says of the industry's future investment prospects.
This is not to say that the looming Federal health overhaul is not without its short-comings or risks. As much as Funtleyder says he is on watch for "lower utilization" from the limited network choices and narrow formularies of Obamacare, he's quick to point out that any reduction would likely be offset as the economy improves and people go back to the doctor again.
"It stands to reason that the individual market, which is where we're seeing most of the action with Obamacare, is going to have narrow formularies, meaning you are eligible for fewer kinds of drugs," he says. That could spell trouble for so-called big pharma companies, as much as it could
On the plus side, Funtleyder calls the sector "one of the few places in the whole S&P 500 where you are actually seeing growth and innovation" as well as an active investment banking calendar. "There's been a tremendous upsurge in capital markets activity, particularly on the biotech and services side, where comps that were private for years and years and years are now starting to come public" and bringing their new drugs and new services along with them.
As far as health equipment and service companies, which are facing a 2.3% tax, he feels "there's only upside now" since "the tax may even go away."
And finally, he thinks the managed care or HMO stocks are simply cheap right now and is flagging the possibility of gains for hospitals, clinics and other facilities assuming the number of insured patients goes up, the hit they take from "uncompensated care" will go down.
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