Here’s a question that’s especially vital to ask during market turmoil: What’s something that everyone needs at some point?
The answer: Healthcare.
When there’s something that everyone needs, it can be a huge opportunity for investors.
The healthcare sector is considered recession resistant and not something where margins might be eaten away by inflation.
That’s critical since all eyes are on soaring inflation and a possible recession next year.
Inflation is at 8.6% — the highest it’s been in 40 years — and a lot higher than the Federal Reserve’s target of 2%.
To tackle surging prices, the Fed has started a cycle of dramatic interest rate hikes, along with a move to reduce its $9 trillion balance sheet.
Currently, the central bank’s benchmark federal funds rate is between 1.5% and 1.75%.
It now expects rates to rise to 3.4% by the end of this year and 3.8% sometime next year.
So, how should an investor approach the market in this shifting environment?
I posed that question to Weiss Ratings Senior Analyst Sean Brodrick, an expert at guiding investors through both bull and bear markets.
Sean says certain stocks in the healthcare sector will not only survive this period of pullbacks but will likely thrive.
Investors can see which stocks have the potential to outperform by using our filters on the Weiss Ratings website to see price action and thousands of other financial data points.
Sean emphasizes that during this rough patch in the financial markets, there are plenty of ways to make money:
I can see where the trends are now. Right now, the easiest way for the broad market to move is down.
Some stocks will move up in this environment, and some will hold onto their value.
In a rising interest rate environment, we’re seeing a rotation out of growth stocks — which lead the market for 10 years — into value stocks.
Value stocks are where you’re going to make your money in the short-term, and perhaps the intermediate term, as well.
These stocks tend to have better cash flow and they use that cash flow to pay dividends.
This is the hallmark of many great healthcare stocks, and so that makes them especially attractive in this environment.
Sean is the editor of five publications, including Wealth Megatrends and SuperCycle Investor.
Both publications hone in on geopolitical, social and cultural megatrends that can impact the markets for better or worse.
Members are sitting on open gains of 71.53%, 62.9% and 33.03%.
Sean is focused on the healthcare sector because “the outlook for growth would be silly to ignore.”
According to the Centers for Medicare and Medicaid Services, healthcare spending will grow at an average rate of 4.9% between 2022 and 2024.
By 2030, spending is expected to reach $6.8 trillion.
Keep in mind, Americans pay the most for healthcare and that’s not likely to change anytime soon.
In today’s special four-minute video segment, Sean discusses select stocks that are dividend raisers.
He says although higher healthcare costs here in the U.S. may be painful for consumers, the industry is ripe for investment opportunities:
As long as people can afford healthcare, they’ll get it. Even when the healthcare companies raise their rates — which they are still doing — people will pay it.
Nobody likes to be sick or have any sort of problem that can fixed by a doctor, so they will pay for it.
We have higher healthcare costs thanks to the insurance industry and hospitals here, many of which are for-profit. For-profit means that the profits need to come from me and you.
Right now, there are lots of things that can affect the market, both negatively and in positively.
The market is pricing in a recession for next year and the healthcare sector is recession resistant.
In this insightful video, Sean discusses:
- Traits to look for in healthcare stocks.
- One of the biggest and best healthcare stocks in the world.
- An exchange-traded fund that’s less vulnerable to the wild swings of the market.
- How inflation is beyond the Fed’s control.
And much more.
The information in this short segment couldn’t be timelier. I suggest you click on the video box above.
Happy investing!
Jessica Borg
Financial News Anchor
Weiss Ratings
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