Healthcare stocks have been doing well lately, even though healthcare is recognized as one of the more defensive market sectors. For the past year, the group is up nearly 33%, as measured by the Healthcare SPDR ETF (NYSE: XLV). Against the SPDR S&P 500 ETF (NYSE: SPY), which gained nearly 50% for the year, healthcare's rise is noteworthy, especially with speculation about how the new reforms will impact the industry. Furthermore, investors should note that generally corporations in the healthcare industry carry smaller price-to-earnings (P/E) ratios than those in other sectors.

IN PICTURES: World's Greatest Investors

Year to date, the rise has been nearly 4% as compared to the broad market's 5.35% increase for the same period. Below, we highlight three healthcare performers who stand out from a fundamental value perspective.

Vaccines That Pay

Sanofi-Aventis SA (NYSE: SNY) is a Paris-based pharmaceutical giant that specializes in vaccine production. The company's shares have risen by almost 36% in the past year and currently trade with a dividend yield of 4.37%. The present P/E ratio is 13.78, and the market cap is just a tad lower than $100 billion.

Last month, Sanofi-Aventis completed its acquisition of Chattem, thereby acquiring several popular American health-related brands and gaining a solid base from which to grow in the U.S. The deal was worth $1.9 billion and includes the well-known Gold Bond and Selsun Blue products.

Second Pharma Giant Also Acquiring

Pfizer (NYSE: PFE) is another healthcare heavyweight, with a market cap in excess of $139 billion and a business that's focused in a number of different areas including pharmaceuticals, human and animal vaccines as well as a well-known line of consumer healthcare products.

In the last year, Pfizer shares were up 26%. They currently trade with a multiple of 12.73 times last year's earnings and carry a yield of 4.17% per annum.

Grupo Casa Saba SA (NYSE: SAB) is a Mexican distributor of health, beauty and pharmaceutical products. Last year the company's stock gained 25%. It currently sports a 2.95% annual dividend and trades with a competitive P/E of just 10.97.

SAB's price-to-book ratio is also attractive at 0.82, significantly below the industry and broader S&P 500. The company's market cap is $437 billion.

The Wrap

Healthcare shares are largely defensive plays, like utilities and telecoms, and those issues that carry strong dividends offer even more safety to investors concerned about the bull market's sustainability. The above three stocks lead the healthcare sector, offering some of the best fundamentals that group has to offer. (To learn about implications of the new healthcare reforms, refer to 10 Ways The New Healthcare Bill May Affect You.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Mutual Funds & ETFs

    ETFs Can Be Safe Investments, If Used Correctly

    Learn about how ETFs can be a safe investment option if you know which funds to choose, including the basics of both indexed and leveraged ETFs.
  2. Mutual Funds & ETFs

    The Top 5 Large Cap Core ETFs for 2016 (VUG, SPLV)

    Look out for these five ETFs in 2016, and learn why investors should closely watch how the Federal Reserve moves heading into the new year.
  3. Economics

    India: Why it Might Pay to Be Bullish Right Now

    Many investors are bullish on India for all the right reasons. Does it present an investing opportunity?
  4. Investing

    How To Make Sure Your Healthcare Costs Do Not Ruin Your Retirement

    The best proactive plan of action for a stable retirement is to understand medical costs, plan ahead, invest properly, and consider supplemental insurance.
  5. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  6. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  7. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  8. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  9. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  10. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
RELATED FAQS
  1. Does dental insurance cover implants?

    Dental implants have become a widely used procedure in dentistry. Despite their popularity, however, they tend to not be ... Read Full Answer >>
  2. Does dental insurance cover dentures?

    Most full dental insurance policies include some restorative coverage, usually meaning that up to 50% of the cost of dentures ... Read Full Answer >>
  3. Can CareCredit be used for family members?

    CareCredit has become a widely used option when it comes to paying for medical procedures, primarily procedures not typically ... Read Full Answer >>
  4. Can a Flexible Spending Account (FSA) be used for dental?

    Flexible Spending Accounts (FSAs) can be used to pay for dental expenses including deductibles and co-payments with pretax ... Read Full Answer >>
  5. Does dental insurance cover braces?

    Most regular dental plans cover little to none of the costs of braces. The primary focus of regular dental plans is prevention ... Read Full Answer >>
  6. Does dental insurance cover crowns?

    Dental insurance coverage may vary according to the type of plan and the level of benefits that you have elected. Most dental ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center