A surprising recovery for health stocks

Wednesday, February 8, 2017

What are we looking for?
U.S. health-services stocks with strong profitability and reasonable valuations. So far, 2017 has been a wild ride for U.S. investors. With the markets up about 2 per cent year to date, there have been some surprising differences between investor expectations and reality. Nearly everyone expected a strengthening U.S. dollar in 2017 with the prospect of rising U.S. interest rates. In fact, the dollar index has dropped by 3.3 per cent year to date. In another surprise, U.S.-listed health-care stocks, which were expected to sag with the repeal of Obamacare, have actually moved upward by 2 per cent since the start of the year. Might U.S. health-care stocks be poised to continue surprising investors in the coming months?
The screen
We begin by setting a minimum market capitalization threshold of $2.5-billion (U.S.) to focus on larger, more established companies in the health-services industry. Next, we will look for companies with strong profitability as demonstrated by their projected earnings-per-share growth rate (based on analyst estimates) and their return on equity... Read the full article here.