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New Trends in Healthcare Push Stocks Higher: 5 Picks

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Recently concluded mid-term elections have provided a much needed boost to the healthcare sector. New trends that the majority of healthcare companies are working on are also boosting the sector. In fact, the Health Care Select Sector SPDR (XLV) has outperformed the S&P 500 in the past six months.

Additionally, healthcare is a sector that could witness growth despite a global slowdown or an economic breakdown because these factors have no effect on health issues or diseases. Therefore, it might be prudent to invest in a few healthcare stocks to benefit from the tailwinds the sector is experiencing.

Healthcare Stocks Poised for Gains

Healthcare stocks will benefit from Democrats taking control of the House of Representatives, following the recently concluded mid-term elections. A divided control of Congress is undoubtedly favorable for the healthcare sector as it indicates the continued existence of Obama-era health care laws.

Health-insurer stocks such as Humana HUM and Anthem ANTM will benefit from such an outcome.  Also, drug price cuts are unlikely to pass both houses, a favorable outcome for drug companies.

Healthcare stocks have gained some traction in the second half of this year, having underperformed the market for nearly three years. Health Care Select Sector SPDR has gained more than 7% against the Dow Jones Industrial Average over the past six months, making a comeback to the highs witnessed in mid-October.

Latest Trends in Healthcare Moving Markets

The new trends in healthcare sector have gained investors’ attention who are now focusing on companies that have taken a different approach to combine human skills with emerging technologies. Companies such as Synthetic Biologics, Inc. SYN are developing treatments designed to safeguard the microbiome to improve patient health.

Several healthcare companies are also collaborating with corporate giants such as International Business Machines Corporation IBM, NVIDIA Corporation NVDA and Google Inc. GOOGL to implement artificial intelligence in the process of developing therapeutics. 

5 Medical Stocks to Buy

Given the prospects of healthcare stocks soaring higher, we have handpicked a few stocks from the sector that carry a Zacks Rank #1 (Strong Buy) or #2 (Buy).

Molina Healthcare MOH is a multi-state healthcare organization and offers a wide range of quality healthcare services. The company carries a Zacks Rank #1.

Molina Healthcare’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for the company’s current-year earnings has advanced 22% in the past 60 days.

Anthem is a provider of health insurance plans and carries a Zacks Rank #2. The company’s expected earnings growth rate for the current year is 30% compared with the Zacks Medical - HMOs industry’s projected rise of 19.7%. The Zacks Consensus Estimate for the company’s current-year earnings has risen 1.1% in the past 60 days.

Humana provides a broad range of health insurance plans and carries a Zacks Rank #2. The company’s expected earnings growth rate for the current year is 23.3% compared with the Zacks Medical - HMOs industry’s projected rise of 19.7%. The Zacks Consensus Estimate for the company’s current-year earnings has increased 1.8% in the past 60 days.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Johnson & Johnson JNJ is engaged in the research and development, manufacture and sale of a range of products in the healthcare field. The company is trying out artificial intelligence to smoothen its drug discovery process. The company carries a Zacks Rank #2. The Zacks Consensus Estimate for the company’s current-year earnings has increased 0.2% in the past 60 days.

Merck & Co. MRK is a leading global biopharmaceutical company that is exploring the potential of artificial intelligence to streamline their process of drug discovery. The company carries a Zacks Rank #2. The Zacks Consensus Estimate for the company’s current-year earnings has increased 1.6% in the past 60 days.

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