Some people would say the healthcare sector is boring and is not where a portfolio will beat the markets. That might be true in the short term, but in the longer run these stocks are of the highest quality, sport modest multiples and pay dividends with confidence.
Companies such as Tenet Healthcare (THC) and HCA Healthcare (HCA) have strong balance sheets and attract big institutional investors. These stocks may not catch lightning like a Tesla (TSLA) , Apple (AAPL) or Microsoft (MSFT) , but they are reliable and often beat the rest of the market.
Let's take a look at HCA, my favorite name for 2022.
After falling off a cliff in early 2020 (like most other companies did) this hospital operator has stormed back in a big way. The weekly chart shows an amazing trend, straight up with checking back to the 20-week moving average on occasion. Those moves back have been great entry levels. Volume trends have been positive.
Why are the other indicators not as positive on this stock, which sits at all-time highs? A weekly chart takes time for the indicators to turn.
The cloud is green and the trend is up, with higher highs and higher lows on the chart. We could see a pullback toward the $240 area as a spot to add shares.
Even when the stock was overbought on the relative strength, HCA remained a horse. We could see this make a run at $300-$320 by end of 2022, a smooth ride up barring any disasters in the economy.
-- Bob Lang and Chris Versace are co-portfolio managers of the Action Alerts PLUS member club.