Can Healthcare Stocks Continue To Outperform?
Healthcare Stocks Continue to Outperform Market
- UNH up 2.28%, XLV down only 12.89% YTD.
- Large Cap Biopharmaceutical leaders: VRTX, MRK, LLY, REGN all up over 10% YTD.
- SMID Cap Biotech breach technical lows with XBI down over 31% YTD.
Large-cap healthcare and biotech stocks have been resilient amidst the market turmoil caused by rising rates and the global geopolitical crisis. If your portfolio was overweight large cap energy and healthcare equities you may have been insulated from big losses. Small caps of any flavor are being crushed with all the major EFS hit hard: IWM down over 24%, IJR down 22%, IWD down17% YTD. The ARG is down over 50%. Without small cap strength generally, biotechs and the XBI cannot rally.
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Biotech ETFs are underperforming when momentum in the sector is waning. You need to pick outstanding stocks or stay with large caps. The IBB is down over 24% and the up-trend was broken at the $120 level.
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Moreover, with 2-year treasury yields over 4% you don’t need to take short-term risk for decent gains.
Consider adding life science tools and diagnostics stocks to your portfolio. One of our top picks is the T.Rowe Price Health Sciences Fund (PRHSX). Among the top holdings are: UNH, DHR, TMO, ISRG, and LLY adding a diversified mix of large cap tools and device stocks. These are growth stocks with less volatility in revenue,
Keep in mind that healthcare is a defensive sector so with an upside reversal rally healthcare could be left behind. Sector shifts are volatile as we saw last week with energy stocks. This is a treacherous volatile market with daily MACRO events. More clarity should be coming with Q3 earnings.
Long all large cap biopharmas, UNH, PRHSX, XBI.
| Model | |||||||||||
| PORTFOLIO | |||||||||||
| 2020 | 2020 | 2020 | 2021 | 2022 | |||||||
| Stock/ETF | Ticker | Price | Wgt | Price | Price | 1 year | Price | YTD | 30days | ||
| 10/25 | % | 12/31 | % Perf | 12/31/21 | % Perf | 9/23/22 | %Perf |
%Perf |
|||
| iShares NAZ Bio | IBB* | 136 | 15 | 151.5 | 25.7 | 152.62 | -31.14 | 115.32 | -24.44 | -8.02 | |
| iShares Russell 2k | IWM | 163 | 5 | 196.4 | 18.3 | 222.45 | -20.36 | 167.31 | -24.79 | -12.38 | |
| Merck* | MRK | 80 | 10 | 81.77 | -10 | 76.64 | 11.81 | 86.78 | 13.23 | -3.79 | |
| United Health | UNH | 330 | 25 | 350.7 | 27.19 | 502 | 21.86 | 513.61 | 2.28 | -4.14 | |
| SPDR S&P Bio | XBI | 117 | 10 | 140.8 | 48 | 111.96 | -38.67 | 76.65 | -31.54 | -12.65 | |
| Healthcare SPDR | XLV | 108 | 25 | 113.4 | 14.71 | 140.89 | -8.57 | 122.73 | -12.89 | -5.12 | |
| T.Rowe Hlth Sci | PRHSX | n/a | 5 | 99.65 | n/a | 104 | -25.4 | 83.84 | -19.45 | -7.79 | |
| iShares U.S MedT | IHI | 50 | 5 | 54.83 | 65.85 | -24.67 | 48.07 | -27 | -7.81 | ||
| Tracking Comp | COMP | ||||||||||
| ARK Genomic | ARKG | 93.26 | 61.24 | -60.55 | 32.14 | -47.5 | -10 | ||||
| FIDO Biotech | FBIOX | 25.18 | 19.35 | -33.57 | 15.03 | -22.33 | -8.35 | ||||
| FiIDO MEDtech | FSMEX | 76.15 | 83.18 | -33.96 | 56.6 | -31.95 | -7.33 | ||||
| DOW | DIA | 310 | 363.32 | -13.58 | 295.9 | -18.57 | -10.1 | ||||
| S&P 500 | SPY | 379 | 475 | -13.45 | 367.95 | -22.53 | -10.77 | ||||
| NASDAQ-100 | QQQ | 315 | 397.85 | -22.41 | 275.51 | -30.75 | -12.29 | ||||
| Top Biopharmas | |||||||||||
| Abbvie | ABBV | 21.66 | 143 | 5.66 | 2.91 | ||||||
| Bristol Myers Sq | BMY | 3.77 | 70.71 | 13.41 | -2.83 | ||||||
| Eli Lilly | LLY | 16 | 311.46 | 12.76 | -1.16 | ||||||
| Merck | MRK | 11.8 | 86.78 | 13.23 | -3.79 | ||||||
| Regeneron | REGN | -14 | 697.33 | 10.42 | 15.73 | ||||||
| Vertex | VRTX | 41 | 283.42 | 29 | -0.98 | ||||||
More By This Author:
Healthcare Sector Still Looks Good But Lacks Momentum
Whither Small Caps After Fed’s Tough Talk?
Check your Portfolio for Small Cap Weighting: Growth, Innovation or Speculation?
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