SMITH BRAIN TRUST – Worldwide fear about the coronavirus is likely to result in the outperformance of health stocks in the near future, Maryland Smith’s David Kass said this week, speaking to a reporter from InvestorPlace. His comments came as global health officials reported a slowdown in the number of new cases of the virus. The outbreak had reportedly infected more than 45,000 people worldwide and killed more than 1,100.
“Since many analysts have recommended investments in biotech stocks that are trying to develop a vaccine for this virus, those particular stocks have already had large stock moves to the upside,” said Kass, clinical professor of finance at the University of Maryland’s Robert H. Smith School of Business. “Instead of those highly visible potential beneficiaries of the spreading of this disease, I suggest looking elsewhere within the healthcare sector.”
In particular, he said, he would look to buy stocks that are currently “under the radar” for this possible epidemic, ones that stand to benefit from the increase in healthcare spending that’s likely to come in the years ahead, as a result of the outbreak.
Here are Kass’ recommendations:
(1) DaVita (NYSE:DVA) provides dialysis services for patients with chronic kidney failure through outpatient facilities and hospitals in the U.S. It also offers ancillary services, including lab/pharmacy services and physician network management. Recently its earnings have been growing rapidly and it has issued a very bright outlook. Twenty-three percent of its shares are owned by Berkshire Hathaway.
(2) CVS Health (NYSE:CVS) is the largest pharmacy health care provider in the U.S. and recently acquired Aetna. As the nation's foremost integrated health-care services provider, its revenues and profits are projected to grow at a rapid rate in the years ahead.
(3) Johnson & Johnson (NYSE:JNJ) is a worldwide leader in the pharmaceutical, medical devices and consumer healthcare products industries. It is likely to continue experiencing rapid growth in revenues and earnings in the foreseeable future.
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