The market's healthcare sector is coming off a very bad year compared to the S&P 500. Relatively speaking, no sector has done worse except for of the telecoms. But not all healthcare stocks have been underperformers.

Healthcare, in fact, might be better considered under two separate groupings: 1) those old-line, mega market cap drug and equipment manufacturers, and 2) the younger, more explosive biotech and experimental drug companies.

Below we highlight both types - three companies that possess some of the best fundamentals in the field, big and small, from pharmaceutical giants to geriatric care specialists.

IN PICTURES: 8 Great Companies With Top-Notch Healthcare Benefits

Outpacing All Relevant Averages

One of the world's biggest drug companies is Pfizer (NYSE: PFE), possessing a market cap approaching $132 billion. After bottoming a month ago with the general market, Pfizer's shares have climbed over 15%. That outpaces both the broader healthcare sector, as represented by the Health Care SPDR ETF (NYSE: XLV), which has risen just over 5% over the same period, and the SPDR S&P 500 ETF (NYSE: SPY), which has climbed 10%. Pfizer trades with a P/E ratio of 13 and offers a dividend yield of 4.4%.

The company was recently embarrassed at the hands of the Food and Drug Administration (FDA), which admonished the drug giant for a dozen violations of agency rules. A letter was sent to Pfizer executives outlining the need to report adverse reactions from its products to the agency within a specified time period.

Strong Five-Year Growth Rate

Sanofi-Aventis SA (NYSE: SNY) is a Paris-based, global pharmaceutical giant with a market cap in excess of $80 billion. The company operates primarily in the field of vaccines for both humans and animals. SNY stock has climbed 4% since the market bottom of a month ago and pays a dividend of 4.8%. P/E on the stock is 11, and Price-to-Book (P/B) ratio is 1.15. For the last five years, SNY has grown sales at a rate of 14.34%.

National HealthCare Corp. (NYSE: NHC) operates 76 long-term health and assisted living centers, primarily in the southeastern United States. In the last month the stock has climbed 3%. It pays an annual 3.2% dividend and trades with a one-year trailing earnings multiple of 14.5. P/B on the stock is a mere 1.32, and price-to-sales ratio is just 0.71.

The Wrap

The best healthcare stocks are those with the fundamentals behind them. Should the broad market finally find its legs, look for the above three issues to lead the healthcare pack higher. (To learn more, see Investing In The Healthcare Sector.)

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

Related Articles
  1. Professionals

    What to do During a Market Correction

    The market has what? Here's what you should consider rather than panicking.
  2. 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.
  3. 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.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI South Africa

    Learn more about the iShares MSCI South Africa fund, which is an NYSE-listed exchange-traded fund offered and managed by BlackRock.
  5. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P 600 Small Cap Growth

    Learn more about the SPDR S&P 600 Small Cap Growth ETF, a highly efficient fund that tracks small-cap equities in the United States.
  6. Mutual Funds & ETFs

    ETF Analysis: WisdomTree International Hdgd Div Gr

    Review an analysis of the WisdomTree International Hedged Dividend Growth Fund ETF, which offers investors broad international exposure.
  7. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraShort Yen

    Learn about the ProShares UltraShort Yen, an inverse-leveraged exchange-traded fund based on the value of Japanese yen in U.S. dollars.
  8. Mutual Funds & ETFs

    ETF Analysis: Market Vectors Semiconductor

    Discover how the Market Vectors Semiconductor ETF chooses its securities, and learn the types of investors for whom this fund is most appropriate.
  9. Mutual Funds & ETFs

    ETF Analysis: WisdomTree SmallCap Earnings

    Discover the WisdomTree Small Cap Earnings ETF, a fund with a special focus on small-cap and micro-cap stocks with positive earnings.
  10. Mutual Funds & ETFs

    ETF Analysis: PowerShares Global Listed Private Eq

    Learn more about the PowerShares Global Listed Private Equity Portfolio, a private equity-based exchange-traded fund, or ETF.
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  3. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  4. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  5. Lion economies

    A nickname given to Africa's growing economies.
  6. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  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

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!