Health Care is 2012's Hottest Stock Market Sector

This article published with permission from

Too many investors are focused on high unemployment, weak economic growth, problems in the Eurozone and runaway deficit spending. They seldom note the positives, including low inflation, rock-bottom interest rates, falling food and energy prices (coal and natural gas), expanding opportunities in emerging markets, low valuations and — not least of all — all-time record corporate profits.

So don’t let the doomsayers get you down. There are always opportunities out there, even during the most difficult economic times.

The health care sector in 2012
In particular, I see the planets aligning for medical technology right now. Why? Baby Boomers are moving into their golden years (and will soon need more health care services). Product innovation is continuing apace. Hospitals and clinics are busy upgrading their technology to cut costs, increase safety and minimize errors. And the health care sector is less sensitive to the vagaries of the business cycle.


Let me use just one example from my Oxford Trading Portfolio: Cerner Corp. (Nasdaq: CERN).

Cerner makes systems that automate records in hospitals and doctors’ offices. This is much more efficient than handwritten notes. It’s also much safer.


Automation reduces errors. Doctors — famous for illegible handwriting — can cause the wrong drug to be inadvertently dispensed at a hospital or pharmacy. They can forget to renew old prescriptions. Cerner prevents that.


The company is also a leader in billing software, with a much wider range of offerings than any of its competitors. For example, its scalable Millennium software is already installed in more than 9,000 hospitals, pharmacies and doctors’ offices. And a new federal push for records automation will only increase that footprint.


Paper records can be easily lost, stolen, misplaced, or destroyed in a fire. That doesn’t benefit the doctor or the insurance company — and certainly not the patient.


The whole world is going digital and the health care sector has lagged behind for too long. Digital medical records are safer, better organized, more accessible and less susceptible to human error. Whenever I see an opportunity this big, I know huge profits are just around the corner.


$4 trillion influx

Cerner is just one of many health care stocks that promise huge capital gains in the weeks and months ahead. And my colleague Marc Lichtenfeld, editor of FirstLine Investor Alert, has uncovered dozens more.


FirstLine aims to profit from the $4 trillion that’s going to flood the health care sector over the coming years. Thanks to nearly four million Baby Boomers turning 65 every year, companies involved in biotech, genomics, regenerative medicine, medical technology and personalized medicine will soon experience explosive growth.


In a recent chat with Marc, he told me about four companies in particular that have huge upside potential right now.


The first is a firm poised to take advantage of the frenzy in the hepatitis C space. Investors have seen buyout premiums of 89% and 163% in the past two months. Plus, in April, the company is expected to have the first drug approved that addresses the cause of a very serious disease, rather than just the symptoms.


The second is an emerging leader in regenerative medicine. In early clinical trials, its treatments produce dramatic improvements in patients with chronic heart disease. If approved, this procedure would both save both lives and millions of health care dollars.


The third is a small firm with a drug that nearly doubles the survival of patients with an aggressive cancer, with few side effects.


The last — and potentially the biggest opportunity — is a company that reads the DNA of cancer tumors. This helps doctors determine the proper course of treatment, allowing the patient to avoid chemotherapy.


Look Beyond Negative Headlines

I can’t emphasize strongly enough how important it is for investors today to look beyond all the negative political and economic headlines and focus on companies that are set to knock the ball out of the park for shareholders.


When Willie Sutton was asked why he robbed banks, he answered simply, “Because that’s where the money is.” For the very same reason, you should invest in the fastest growing companies in the health care sector today.

Alexander Green is the chief investment strategist at See more articles by Alexander here.