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

    ETF Analysis: Vanguard Total World Stock

    Learn about the Vanguard Total World Stock exchange-traded fund, which invests in stocks located in numerous countries with a high level of diversification.
  2. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  3. Mutual Funds & ETFs

    ETF Analysis: BioShares Biotechnology Products

    Learn more about the BioShares Biotechnology Products fund, an exchange-traded fund that is focused on producers of FDA-approved drugs.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR EURO STOXX 50

    Learn about FEZ, the Euro Stoxx 50 ETF. FEZ tracks the 50 largest companies in Europe, making it the Dow Jones Industrial Average of Europe.
  5. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraShort Nasdaq Biotech

    Learn more about an innovative inverse-leveraged sector exchange-traded fund, or ETF, the ProShares UltraShort Nasdaq Biotechnology fund.
  6. Chart Advisor

    Value Stocks Offer Stability in a Volatile Market

    With volatility on the rise, investors are turning to segments of strength such as value stocks. We'll take a look at several ETFs that could be worth a closer look.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: Market Vectors EM High Yield Bd

    Learn more about the Market Vectors Emerging Markets High Yield Bond ETF, a fund dedicated to subinvestment grade foreign debt issues.
  10. Mutual Funds & ETFs

    ETF Analysis: First Trust Tactical High Yield

    Find out more about the First Trust Tactical High Yield fund, a debt security-focused ETF designed to produce high income.
RELATED TERMS
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Net Collections

    A term used in medical accounting to describe the amount of money ...
  3. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  4. Corridor Deductible

    Expenses that are paid by the insured in excess of an insurance ...
  5. Insurance Consortium

    A group of businesses or organizations that join together to ...
  6. Blanket Medical Expense

    An insurance policy which provides coverage for all medical expenses ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  4. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!