Healthcare has proved to be an important sector to have exposure to over the past few years, because of the explosion of new medicines hitting the market and the positive impact of Obamacare on the earnings of some insurance companies and information technology companies alike. The Health Care Select Sector SPDR (NYSEMKT: XLV), for instance, has crushed the broader markets since 2010:
An unwelcome mixture of rising debt levels at a time of potentially shrinking operating margins -- driven by the drug-pricing debate -- has the market spooked, so to speak, leading to these compressed forward P/E ratios. While the market's fear may turn out to be warranted, there are still some compelling buys in pharma that shouldn't be ignored. In fact, I think Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) should produce market-beating returns in 2016, making it a great pick-up for the new year.
Source: Motley Fool
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