By Jay Peroni, CFP®
Want to Capitalize from the Future Trends in Healthcare and the Growing Need for Healthcare Around the Globe?
My All-Weather Portfolio strategy was designed to help investors get more consistent returns. I look for high quality, low volatility investments in an effort to see fewer ups and downs than the overall market. One of the ways I accomplish this is through combining various asset classes like dividend paying stocks, currencies, commodities, precious metals, bonds, and other hedging vehicles. For the past 5 years, the strategy has worked well. Since 2009 the strategy is up over 134% (as of 3-28-13)!
That works out to 31.5% per year!
One of my favorite tasks is looking for defensive stocks that can weather the ups and downs that come our way. I especially like the health care sector because there is always a need for quality medicine and medical care no matter what the economy is doing.
The facts regarding the future of global healthcare are compelling:
- Aging populations in developed countries will continue to demand more health care.
- As emerging markets adopt modern medical practices, their consumption of health care will increase dramatically.
- Growing global utilization may benefit providers of low-cost, high-volume health care products that will be demanded in both developed and developing countries.
In the health care sector, one of my favorite selections is a company called Covidien PLC (NYSE: COV), which pays a 1.4% dividend. It is up nearly 50% since I bought it in December of 2011, and I believe its best days are still to come.
Covidien is engaged in the development, manufacture and sale of healthcare products for use in clinical and home settings. It operates its businesses through three segments: Medical Devices, Pharmaceuticals and Medical Supplies.
Here are a few reasons I love this stock:
1. Covidien’s latest product launches have the potential to become strong contributors to its top line results. One area that is exciting is its wireless energy device, Sonicision, which was launched in 2012. With Sonicision™, Covidien enhances its energy portfolio from electro-surgery to vessel sealing and now ultrasonic dissection.
- Faster dissection than the Harmonic ACE™
- Thermal spread, vessel burst pressure, hemostasis, seal time and blade temperature comparable to the Harmonic ACE™
- Up to five times less plume than Harmonic ACE™
- Finalist for a 2013 Medical Design Excellence Award
2. Covidien’s vascular business has been enjoying robust growth over the past few years. Its stellar product portfolio in neurovascular has aided this rapidly growing market.
3, Covidien is launching a study to determine the clinical efficacy of bariatric procedures in treating Type 2 diabetes in patients with a body mass index less than 35. This has a lot of promise for the future. If these studies produce positive results, the potential patient pool could increase by about 5 million people.
4. Emerging markets offer a sizable and rather underpenetrated marketplace for the company. Covidien is launching a number of products designed specifically for emerging markets, which should give the company an opportunity to position itself as a top medical instruments player in these attractive markets.
Bottom Line: Covidien is a good buy up to $75 a share. My 12-to-18 month price target is $100, representing a 50% rise from its current price.
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Disclaimer: Investing involves risk. Always do your own due diligence and consult a trusted financial professional before making any investing or financial decisions. Jay Peroni is a Certified Financial Planner and is part of our Christian Financial Advisor Network. FTMDaily is affiliated with Jay Peroni and Faith Based Investor, LLC.