There's a lot of talk this week about the healthcare sector
and how these stocks could see a change in fortunes depending on
Tuesday's midterm elections. The theory on Wall Street is that a
shift towards the Republicans in the house or possibly even the
Senate could erect serious roadblocks before previously passed
healthcare legislation. Though the GOP may not have the votes to
repeal the law, they can certainly cause trouble by denying
funding and starving key elements of the legislation.
I'll leave the political analysis to Washington insiders, and
I'll leave the election results to the voters on November 2. All
that I can say with any certainty as a Wall Street expert is that
many health care companies are hurting right now and no amount of
change in the laws can add dollars to their bottom line fast
enough to make them good short-term buys. Their operations, sales
and profits are just not good enough to make them a part of a
healthy portfolio - no matter what Election Day 2010 brings.
To keep you from getting into the wrong healthcare companies
or sticking with some sickly stocks, here's my list of 8 big-name
medical companies to sell immediately.
) develops, researches, manufactures and markets healthcare
products. Sanofi-Aventis offers a wide range of products
dealing with diabetes, oncology, thrombosis, cardiovascular
diseases and central nervous system diseases. SNY has had
an unimpressive 2010 thus far. Year-to-date the stock is
down -11.1% compared to gains of +6.5% and +6.1% for the Dow
Jones and S&P 500. SNY has also missed two of its last
three earnings estimates. At $35.02, SNY is a healthcare
stock worth selling.
Medco Health Solutions Inc. (
Medco Health Solutions
) provides clinically-driven pharmacy services made to improve
the quality of care and lower health care costs for private and
public employers. Medco also works with government agencies
and labor unions. Since January, MHS stock has slid
-18.1%. Trading at $52.42, MHS is far removed from its
52-week high of $66.94. Sell this healthcare stock before
it does any more damage to your portfolio.
Medical technology company
) researches, designs, develops and sell products to alleviate
pain, restore health and extend life. Year-to-date, MDT
stock has lost -$8.49, or -19.3%. Additionally, Medtronic
reported a quarterly revenue growth of -4.1% year-over-year in
its last income statement. With a stock price of $35.48,
MDT has a 52-week range of $30.80 to $46.66.
Baxter International Inc.
) is a developer, manufacturer, and marketer of products that
deal with hemophilia, immune disorders, infectious diseases,
kidney disease and trauma. Since January, this health care
stock is down -13.6%, compared to small gains by the broader
markets. The biggest drop in 2010 occurred in late April,
when BAX stock plummeted -30% in one month. Baxter
International currently trades at $50.68, down from a 52-week
high of $61.88.
) develops and manufactures healthcare products for clinical and
home settings. The company operates in three sections:
medical devices, pharmaceuticals and medical supplies.
Year-to-date, COV stock has dropped -16.8%. Even worse, the
healthcare stock is down -22.5% since late April. Analysts
are bearish on Covidien, as they have dropped earnings estimates
to $0.74, after a reported EPS of $0.85 last quarter. Sell
Covidien stock now, as it trades at $39.90.
Intuitive Surgical (ISRG)
) designs manufactures and markets surgical products and
accessories, including endoscopes, dissectors, scalpels, forceps
and other instruments. Since the start of 2010, ISRG stock
has slid -13.4%, compared to gains by the broader markets. ISRG
is a very expensive stock, trading at $263.06, and is not far
removed from its 52-week low of $243.10. It should be noted
that ISRG traded at nearly $400 in April. Clearly,
Intuitive is an expensive stock worth selling.
Zimmer Holdings (ZMH)
Zimmer Holdins Inc.
) is involved with the design, development, and marketing of
orthopaedic reconstructive implants, dental implants, spinal
implants and trauma products, among other products. Zimmer
markets its products in over 100 countries. Year-to-date,
this healthcare stock is down -19.5%. Zimmer currently
trades at $47.56, which is very close to its 52-week low of
Gilead Sciences Inc.
) discovers, develops and commercializes therapeutics in North
America, Europe and Australia. This healthcare stock has
fallen -7.8% since January, and is down -18% since
mid-February. While GLD has rebounded slightly since
September, it is still almost $10 removed from its 52-week high,
with a stock price of $39.88. Gilead is still a healthcare
stock worthy of selling.
As of this writing, Louis Navellier did not own a position
in any of the stocks named here.