Though stocks overall are rather overpriced lately, within this broad-brush circumstance there remain equity areas that are overlooked and undervalued. Two of these are our focus this time.
The first, health care companies, have been relatively depressed for awhile due to concerns over profitability, as individuals, employers, insurance companies, and governments react to ongoing double-digit increases in costs for medical treatment and prescription drugs.
Yet this overall sector includes quite well managed corporations that have superb financial strength and average returns on shareholder equity of 15% or better.
Meanwhile, our population (and electorate) is aging. One way or another, the politicians and the people they purport to serve must come to terms with the financial realities in a way that remains lucrative for the companies which will provide our essential health related services. As it has always been, the strongest publicly owned health care companies, whether name brand pharmaceutical businesses, biotechnology enterprises, hospitals, medical technology companies, generics, etc., will not only prevail but make plenty of money for their shareholders.
Pfizer (PFE) (recent price $35.00), Omnicare (OCR) (recent price $43.82), and Quest Diagnostics (DGX) (recent price $76.81) look attractive at this time.