With the beating the market took Thursday, many investors are starting to get a little worried that a major correction might be right around the corner. With the first quarter winding down, only two sectors are showing solid gains: health care and utilities. While the rest of the market worries about growth slowing down in China, these two sectors continue to plow ahead bringing investors some solid 2014 gains.
In a new report out from Jefferies, the analysts point out that weakness in some momentum stocks, weakness in biotech, China, Ukraine, S&P technicals — all these things may argue for a continued value rotation. They also posted a complete list of the cheapest on a price-to-earnings (P/E) basis of the top health care stocks to buy now. Investors concerned about the toppy market, but wanting to stay invested, may want to rotate capital to these top names.
Here are the top health care stocks to buy at Jefferies, ranked by the lowest P/E ratio.
Wellpoint Inc. (NYSE: WLP) trades at an incredibly low 10.3 times earnings and is a Buy-rated stock at Jefferies. The company has started diversifying more heavily into consumer-oriented and health information technology businesses in 2011, and it is continuing with the strategy. Investors receive a 1.9% dividend. The Thomson/First Call price target for the stock is $95.74. Wellpoint closed Thursday at $93.27.
Questcor Pharmaceuticals Inc. (NASDAQ: QCOR) is trading at just 13.3 times earnings. The company provides drugs for the treatment of multiple sclerosis, nephrotic syndrome and infantile spasms indications. Investors are paid a 1.9% dividend. The consensus price target is $87.89. Questcor closed Thursday at $61.74.
Pfizer Inc. (NYSE: PFE) trades at a low 14.0 times earnings. The company updated investors and physicians at the conference on the Phase II trial results on palbociclib for advanced breast cancer. The doctors on the breast cancer panel at the conference were much more optimistic than previously about the possibility of palbociclib being filed and approved on Phase II data in first line advanced breast cancer. Preliminary/interim overall survival data will be presented at AACR on April 6. Investors are paid a 3.3% dividend. The consensus price target is posted at $33.69. Pfizer closed Thursday at $31.12.
UnitedHealth Group Inc. (NYSE: UNH) trades at just 14.1 times earnings. The company offers the full spectrum of health benefit programs for individuals, employers and Medicare and Medicaid beneficiaries, and it contracts directly with more than 800,000 physicians and care professionals, as well as 6,000 hospitals and other care facilities. Investors are paid a 1.4% dividend. The consensus price target is $82.36. The stock closed Thursday at $77.01
HCA Holdings Inc. (NYSE: HCA) is one of the top hospital names to buy and trades at a low 14.6 times earnings. HCA has scale advantages as the largest private hospital operator in the United States and is diversified geographically. The company also benefits from local market density, with the number one or number two market share in most of its local markets. Wall Street also views the company’s experienced management team as a strong positive. The consensus target is $56.00. Shares ended Thursday at $48.00.
Amgen Inc. (NASDAQ: AMGN) is the top blue chip name in the biotech world. A biotechnology pioneer since 1980, Amgen focuses on areas of high unmet medical need and leverages its biologics manufacturing expertise to strive for solutions that improve health outcomes and dramatically improve people’s lives. The company trades at a low 17.0 times earnings and made our low forward P/E stocks to buy list. Investors are paid a 2% dividend. The consensus price target is $130.05. The stock closed Thursday at $123.96.
Johnson & Johnson (NYSE: JNJ) is a top yielding health care name to buy on the Jefferies list, and it trades at 17.0 times earnings. With company offering everything from medical devices to over-the-counter health items, the stock is a solid add for conservative portfolios. Investors are paid a 2.8% dividend. The Jefferies price target for the stock is $95. The consensus price target is even higher at $100.90. Johnson & Johnson closed Thursday at $93.
AbbVie Inc. (NYSE: ABBV) is a top cheap pharmaceutical name to buy, trading at 17.7 times earnings. The company has thrown its hat in the ring in the race of oral interferon-free combination therapies for hepatitis C. It has finished up its Phase III clinical-trial program for its all-oral hepatitis C drug cocktail. There were six clinical trials in total, testing the drugs in different patient populations, in many cases with and without generic ribavirin. AbbVie’s drugs only have to be taken for 12 weeks in most cases and do not require peginterferon. Investors are paid a very solid 3.3% dividend. The consensus estimate is $54.14. AbbVie closed Thursday at $51.32.
Most of these top stocks to buy not only trade cheap to their trailing earnings, which is what these numbers represent, they trade very cheap to their forward or expected earnings. The volatility in the stock market is creeping up again, and nervous investors that are starting to tire of getting whipsawed may want to buy some of these top health care names. They are inexpensive, pay dividends and have a defensive posture — three good reasons to buy them.