A good indicator of the market’s current bullishness can be found in our Sector Analysis, the first ‘level’ of our Top Down Analysis. Six of the ten sectors followed by MarketGrader currently have a Neutral rating based on the underlying price strength and momentum of the stocks in them: Consumer Discretionary, Energy, Financials, Industrials, Information Technology and Materials. The other four sectors are rated Positive: Consumer Staples, Health Care, Telecom Services and Utilities. None, of course, are rated Negative. That the four sectors with a Positive rating are traditionally considered to be defensive havens is not a coincidence given investors’ recent uncertainty about the aging bull market’s ability to continue its upward trend; particularly in anticipation of the Fed’s unwinding of QE2. So, as investors ponder what the stock market will look like in the second half of 2011 we would like to highlight one of our currently favorite sectors, Health Care, and particularly our Health Care index.
MarketGrader follows 631 Health Care stocks, with 125, or 19.8%, currently rated ‘Buy.’ 212 stocks in the sector, or 33.6% have a Positive rating. 76 companies receive both a ‘Buy’ rating based on our fundamental analysis and a Positive sentiment rating. 36 stocks in the sector are trading at their 52-week high and only 6 at their 52-week low. And 346 stocks, or 54.8%, are trading above their 50 and 200 day moving average lines with only 109 trading below both lines. The following are MarketGrader’s ten highest graded Health Care stocks that also have a Positive sentiment and trade above $10 per share:
- Jazz Pharmaceuticals Inc. (JAZZ), Grade: 84.6, Sentiment: 9.1
- ViroPharma Inc. (VPHM), Grade: 81.4, Sentiment: 8.8
- Medicines Company (MDCO), Grade: 78.8, Sentiment: 8.1
- AMERIGROUP Corp. (AGP), Grade: 77.4, Sentiment: 8.7
- Cyberonics Inc. (CYBX), Grade: 77.1, Sentiment: 7.2
- Momenta Pharmaceuticals Inc. (MNTA), Grade: 77.0, Sentiment: 8.1
- Medidata Solutions Inc. (MDSO), Grade: 75.9, Sentiment: 8.8
- Align Technology Inc. (ALGN), Grade: 75.8, Sentiment: 8.7
- WuXi Pharma Tech Inc. (WX), Grade: 74.8, Sentiment: 7.9
- HealthSpring Inc. (HS), Grade: 74.7, Sentiment: 8.2
Investors could do worse in following the sector than tracking the MarketGrader Health Care Index, one of our eight sector indexes. This equally weighted basket of 40 stocks is rebalanced quarterly during the third week of February, May, August and November. Subscribers to MarketGrader.com can follow its components and track its performance on a daily basis. It is currently the year’s top performer among our sector indexes with a year-to-date return of 14.4% compared to 8.7% for the S&P 500 Health Care index and 9.6% for the S&P 1500 Health Care index. In 2010 it beat both of these benchmarks by 1,469 basis points and 1,221 basis points respectively. In the last three years, through last night’s close, the MarketGrader Health Care index is up 32.7% (cumulative) compared to 7.3% and 10.8% for the S&P 500 and S&P 1500 Health Care indexes respectively. Here are a few of the index’s components:
Five biggest companies:
- Unitedhealth Group Inc. (UNH), Grade: 71.9, Sentiment: 9.5
- Amgen Inc. (AMGN), Grade: 68.3, Sentiment: 6.4
- Eli Lilly and Co. (LLY), Grade: 71.3, Sentiment: 7.9
- Gilead Sciences Inc. (GILD), Grade: 66.9, Sentiment: 6.8
- Celgene Corp. (CELG), Grade: 59.3, Sentiment: 6.8
Top five performers since its last rebalance:
- Biogen Idec Inc. (BIIB), Grade: 73.2, Sentiment: 9.5
- Hi Tech Pharmaceutical Co. Inc. (HITK), Grade: 88.2, Sentiment: 5.4
- Questcor Pharmaceuticals (QCOR), Grade: 49.8, Sentiment: 5.4
- Perrigo Co. (PRGO), Grade: 66.2, Sentiment: 9.3
- Resmed Inc. (RMD), Grade: 67.9, Sentiment: 6.6
Guest readers may access all 40 components of the MarketGrader Health Care index for free for a limited time by clicking here. For a complete breakdown of the entire sector and for the components of the other seven MarketGrader sector indexes we encourage you to take a free trial of our service.
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