The health-care sector is one of a number of sectors which have, in the past, seen valuations get ahead of future earnings potential.
Many investors who have continued to seek growth in stable markets which have stability and the potential for long-term earnings growth have relied on health-care stocks to see them through the rough times which may be on the horizon, and provide a much needed boost when the going gets rough.
The thinking makes sense - the general public will always need health care, and spending on health care is unlikely to go down, as folks will generally not skimp when it comes to their health-care needs.
That said, increased governmental scrutiny related to pricing schemes by many pharmaceutical manufacturers has changed the perspective of many bullish investors on this sector, adding some retardant to a fire that has been blazing for quite some time in financial markets.
With these headwinds, and many others, in the news of late, investors who have been on the fence with respect to healthcare stocks (like the story, but think these companies are too expensive) have interesting entry points on many of the largest names in the sector.
Picking up stocks cheap is what value investors do, though one has to be careful in this space of picking companies that really do have a long-term moat relative to their peers - there is nothing worse than investing in a company with a falling share price, only to see the company's share price continue to fall until it finds a much lower bottom.
Invest wisely, my friends.
