Pfizer Inc. (PFE), Merck & Co., Inc. (MRK): Where to Invest for More Health-Care Exposure

Where to invest: a health insurer

This one is optional as far as I’m concerned. Health insurers are a different beast altogether. They’re not necessarily recession-resistant, because when people lose their jobs, they lose their health insurance. But those who know they’ll have health-care expenses greater than the cost of the premium are most likely to keep their coverage under COBRA, which cuts into insurers’ margins. There’s also political risk, as health insurers are easy targets for politicians to pick on.

If I was going to invest in one, UnitedHealth Group Inc. (NYSE:UNH) makes most sense, simply because its larger size should allow for more diverse revenue streams from government and private insurers. The overhead is also spread over more revenue, allowing for larger margins.

Bottom line: diversify

You don’t necessarily need to pick a company from each category. If you’re a retiree or have growth elsewhere in your portfolio, perhaps a speculative biotech isn’t appropriate. If you’re young, maybe Johnson & Johnson isn’t really necessary. But having some exposure to the health-care industry should help you round out your portfolio.

The article Where to Invest for More Health-Care Exposure originally appeared on Fool.com and is written by Brian Orelli.

Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Celgene, Gilead Sciences, Johnson & Johnson, and UnitedHealth Group and owns shares of Johnson & Johnson.

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