Why Healthcare Could Be a Winning Investment by Year-End

If you're on the lookout for a sector to invest in as 2024 comes to a close, healthcare could be a smart choice. Historically, the Health Care Select Sector SPDR Fund (XLV) has seen November gains in eight out of the past ten years. Moreover, it has moved upwards in December in four of the last five years. Another plus? Healthcare stocks are relatively affordable compared to the broader market. Healthcare trades at a forward price-to-earnings ratio of 22.2, while the S&P 500 sits at 24. Analysts see this as an ideal time to get into healthcare. Jonathan Krinsky, chief market technician at BTIG, believes the healthcare sector is poised for growth. "We're seeing an attractive entry point ahead of traditionally good months," he wrote. "Even with some overall market risks into late October, adding to healthcare could pay off with new highs by year-end." The XLV has dipped for three consecutive weeks, last seen in May 2023. "It's approaching its uptrend line from April lows, making it a good time to jump in," Krinsky added.

The iShares Biotechnology ETF (IBB) also shows promise, with an average November gain of 3.3% over the past two decades. Healthcare is currently lagging behind the broader market. Year to date, the XLV has risen by 11.3%, whereas the S&P 500 has surged by 20.6%. Some healthcare companies to keep an eye on? Masimo and Viking Therapeutics. Masimo's shares have increased by 19% in 2024, while Viking's have soared by a whopping 258% thanks to expectations for its experimental obesity treatment. Masimo's CEO was recently ousted following a proxy fight with activist investor Politan Capital. In other business news, Citi gave UPS a buy rating, projecting a 23% price increase. Despite competition from Amazon Logistics and Walmart Fulfillment Services, UPS is in a good position to benefit from the end of the freight recession and the start of a new upcycle.

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