Paul MacDonald, chief investment officer and portfolio manager at Harvest Portfolios Group
Focus: Healthcare stocks
The healthcare sector is a direct beneficiary of one of the only secular, non-cyclical and permanent investment themes: the global aging population. Furthermore, as wealth increases in developing economies there’s a disproportionate increase in the amount of spending on healthcare. These will likely result in significantly increased demand for healthcare products and services over time. Finally, technological innovations coupled with regulatory advancements are paving the way for catalysts across the healthcare subsectors.
Widely known political discussions on how to deal with the rising healthcare costs over recent years has caused sector volatility to increase and valuation multiples to contract. During 2018, the political discussion driven by the Trump administration has filtered to subsectors beyond drug manufacturers and is particularly focused on the “middlemen,” an area where the Harvest Healthcare Leaders Income ETF has reduced exposure. This change in the political rhetoric has prompted multiples in many of the healthcare sub-sectors to start to move higher, resulting in healthcare being the top-performing sector year-to-date in the S&P 500 Index. With broader market volatility, healthcare benefits from its superior good status that has resulted in many of the underlying stocks having defensive characteristics historically. This has also contributed to the sectors performance in 2018.
The underlying outlook remains robust, with numerous short- and medium-term stock-specific catalysts coupled with expectations of improving top and bottom line financial performance.
Source Link: https://www.bnnbloomberg.ca/paul-macdonald-s-top-picks-dec-3-2018-1.1177583