Investing Ideas

Some Prominent Analysts Reiterate that Healthcare Sector is “The Place to Be”

On CNBC's "Options Action: The Final Call," Carter Braxton Worth said healthcare is “the place to be” and named Health Care Select Sector SPDR Fund.

On CNBC's "Options Action: The Final Call," Carter Braxton Worth said healthcare is “the place to be” and named Health Care Select Sector SPDR Fund. The fund has added more than 22% year-to-date, but closed lower by almost 1% on Friday, settling at $137.92.

Tony Zhang with Bank of America Corp. recommended “a play for a rise in interest rates…“Selling put options”. So what are the sector’s favorites?.

First up it is Eli Lilly (LLY), a major player in the pharmaceutical industry and one of the top picks to consider in the healthcare sector at this time. The company focuses on developing and manufacturing therapies to treat pain, diabetes, cancer, and neurodegenerative diseases and recently hosted an impressive investor day that sent shares soaring to new highs. What really stood out during the event was the fact that Eli Lilly boosted its full-year revenue guidance to $28-$28.3 billion from $27.2-$27.6 billion and referenced strong growth potential and a robust drug pipeline.

While Johnson & Johnson (JNJ) is certainly a healthcare company that has faced its fair share of controversies in recent times, it’s still one of the leading stocks to consider in the sector. The company has created a true healthcare empire, with three divisions including pharmaceutical, medical devices and diagnostics, and consumer. This diverse business model has helped the company become a free cash flow generating machine, which in turn has allowed Johnson & Johnson to grow its dividend for 59 consecutive years. That type of consistency is rare in today’s market, and a 2.45% dividend yield is certainly appealing given inflation concerns.

With healthcare in the spotlight throughout the global pandemic, it makes a lot of sense to consider adding shares of the largest pharmacy health care provider in the United States, CVS Health Corporation (CVS). The company has been making some major moves to improve its long-term growth prospects, and it appears that investors are really starting to notice given that the stock is trading at 52-week highs. Notably, the company’s HealthHUB concept could be a big growth driver, as these are remodeled stores that have expanded services and offerings. The goal is to help patients conveniently and affordably manage chronic health conditions with these remodeled stores, and there should be over 1000 operational HealthHub stores by the end of the year.

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