dimanche 14 décembre 2014

Healthcare stocks

I really like Healthcare stocks.

In times of turbulences like these days, you can appreciate these stocks. Because these stocks usually don't give a fuck about the state of economy which isn't the case of a shitload of natural resources stocks. Or even financial stocks sometimes. 

Most of these healthcare stocks have a low beta (consistent revenue growth however the state of economy). Plus, as long as there will be a humankind, there will be sick people and these sick people will need to take pills or go to the hospital to recieve some expensive treatment. Capitalism means that there's no pity for sick people. Give us your money and get better or die. Fuck you. We don't care about your life. We only care about the value of our shares. If we cared about your health or about humanity, we'd be doing some fucking humanitarian shit in Adis Abeba.

What I like the most about healthcare, is that there's no fashion in this industry. Well, there's fashion everywhere, but when you buy some pills because you have HIV, flu or leper, you usually don't give a fuck about the company that produces the pills. You just want to get better.

Here's some great companies that deserve attention. A patent expiration is always a threat for healthcare stocks. Stocks can get hurt a lot when competition appears. But great companies usually got a fucking pile of money to boost R&D or to buy another company to keep growing. Anyway, if your portfolio is well balanced (with 15 or 20 companies), you'll do well even if one or two of your healthcare stocks have problems. For example, if you have a portfolio of 10-12 healthcare stocks like: Gilead, Celgene, Biogen, Abbvie, Actavis, Merck, Johnson and Johnson, Jazz Pharma, Cipher, Valeant and Concordia Healthcare, I'm sure you'll do very well in the next 5 years. It's impossible that all of these go wrong. I'll even dare to say that it's impossible that more than 3 of these companies have big problems in the next 5 years. All the others will benefit from diseases all around the world which continues year after year, as the population of earth keeps growing.

So, here are 5 good potential investments:

Gilead (GILD):
Forward PE Ratio: 10
ROE last 5 years: 77

Celgene (CELG):
Forward PE Ratio:24
ROE last 5 years: 27

Jazz Pharma (JAZZ):
Forward PE Ratio: 16
ROE last 5 years: 33

Biogen (BIIB):
Forward PE Ratio:21
ROE last 5 years: 20

Cipher (CPH.TO):
Forward PE Ratio: 10
ROE last 5 years: 32

All of these stocks have achieved a surprising growth in the last years. They're all good potential investments. With these numbers, the one that looks the more undervalued is Gilead. But let's face it, Gilead is a mega-large cap with a valuation of about 160 billion dollars.

There's also stocks like Valeant and Concordia Healthcare that are good candidates, but they are harder to evaluate because of their heavy use of leverage.

So, my advice to anybody would be to put a considerable part of your portfolio in stocks like these.

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