5 Great Healthcare Stocks To Buy For 2019

In November, healthcare stocks emerged as investors’ favorites. The Health Care Select Sector SPDR (XLV) gained 8.2% over last month, emerging as the leader among the S&P 500’s 11 sectors. With stocks inching close to the bear-market territory, XLV is currently down 2.4% year to date, coming in at the third place behind utilities and communication services stocks.

Rapid innovation, major advances, and the United States’ aging population have managed to sustain the popularity of healthcare stocks. Further, this is a defensive option which has caught the fancy of investors in difficult market conditions. With the economy likely to weaken and a gridlocked Congress unlikely to make major legislative changes, picking select healthcare stocks looks like a smart strategy for 2019.

2018’s Challenges Leave Sector Largely Unscathed

Several roadblocks confronted healthcare this year and most of them had to do with the Affordable Care Act (ACA). The Trump administration has been trying to replace and repeal Obamacare since it began its term. And it succeeded to some extent this year, removing the individual mandate as part of its well-received tax cuts.

The abolishment of the individual mandate led a federal judge in Texas to declare that the ACA was unconstitutional. However, the law will remain in force until the time that all appeals are exhausted. Market watchers point out that time and again, the ACA has proved hard to kill. An appeals court is likely to overturn this latest ruling.

Prospects for 2019 Remain Bright

Meanwhile, voices calling for action on overpriced drugs were heard time and time again. However, a divided Congress will likely prevent any major legislative changes in the near future. Healthcare was a key issue for Democrats during this year’s mid-term polls and their House victories illustrate its emotive power among voters.

Also, 2018 was witness to heated mergers and acquisitions activity. Aetna sealed a $70 billion merger with pharmacy major CVS Health (CVS - Free Report). Meanwhile, Cigna (CI - Free Report) acquired Express Scripts for $54 billion.

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