Contrarian Call -Look at the Drug Stocks
The healthcare sector has lagged the market in 2010 down about 1.34% compared to the S&P up about 9%. The large cap drug sector has done worse down 4.3%. Investors are drawn to more dynamic growth sectors in 2010: energy, industrials,materials and technology. The reasons for the poor stock performance of major drugs has been widely communicated: fewer new products driving biotech acquisitions, patent expiration of blockbusters, healthcare reform concerns and legal/regulatory issues. With the large cap pharmaceutical companies the sentiment has become bearish enough to start looking for new buys especially for investors looking for relative safety and yield. A call/write strategy can also reduce risk. Three good stocks to consider for now would be Abbott(ABT $47.47),Bristol Myers(BMY $25.82) and Novartis (NVS $54.73).
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