There are plenty of opportunities to invest in healthcare stocks, as there are thousands of companies, ranging from big and well-established pharmaceuticals that also pay substantial dividends, to small, emerging companies without any products on the market or revenue, but backed by their research into novelty therapies for various illnesses. When looking for healthcare stocks to invest in, a good way to start your research, is to look at where smart money invest.
Hedge funds and other smart money investors are great at picking stocks, which is why we believe that it can be a good strategy to imitate them. It’s not just our belief, but we have actual data to back it. Our research shows that imitating certain stock picks that hedge funds are collectively bullish on can help a smaller investor beat the market by a big margin. The best approach is to focus on small-cap stocks, which are key to our investment strategy that identifies the best small-cap stocks among best-performing hedge funds. We share the stock picks that are part of our strategy with our premium subscribers every quarter (see more details here). In addition, we have a monthly activist newsletter that focuses on one activist fund and presents the best way to imitate it.
Healthcare stocks should be a part of a well-diversified portfolio for many reasons. The advancement in technology and the aging demographics suggest that the US healthcare sector will continue its growth in years to come. Moreover, healthcare is one of the few sectors that usually perform well during an economic downturn, since healthcare is an expense item that is usually the last to be reduced from a household’s budget.
However, like all sectors, healthcare is very diverse and comprises a lot of industries. One can invest in big, large-cap companies to minimize risks and enjoy solid long-term returns, or in healthcare real estate, which can provide an investor with regular dividend payments and is likely to enjoy a robust growth, since aging population will require more residential care space, while more spending among pharmaceutical companies will increase the demand for space for labs and research centers. For more risk and potentially higher rewards, one can consider investing in small biotech companies, but this area requires much more research, since a lot of the companies in this space are at early stages and their products have yet to prove their worth.
To minimize the risk of investing in smaller healthcare stocks, we have looked at healthcare stocks that are currently trading under $5 per share, but also enjoy some support among hedge funds. In addition, we have narrowed down the list even further by choosing those stocks that saw the largest increase in the number of bullish investors during 2017.