Sarat Sethi shares his stock picks in the health care sector



every once while it's great to get to go bottoms up I think honestly because it with everything swirling around the macro we you really can't we can't gauge we're not in a position to know how some of these things play out and good solid companies that are doing things every day to advance their business and raise revenues and and manage expenses maybe that's the way to go and help us with that today absolutely and if you kind of think of where we are in the market S&P is up 15% yeah early valued so let's look at kind of a sector or stocks that we think have some appreciation so look at the healthcare sector did very well last year in the down market this year is only up 3% and if you do bottoms up you know a couple companies like Zimmer and the aurochs there's one so this is are you making a call and Zimmer making a long-term call a call to own it now for the next couple years it's out of favorite rates of 15 times earnings it's you know in the knees hips shoulders it's got a lot of runway and if you look at demographically not just in our country but overseas this is where money is gonna be spent and they've already been feeling pricing pressure sure this is not something that Medicare for all is really gonna hurt them this is a company that is self-help trades that a multiple below its competitors and I think there's some opera shirt why did they train at a multiple below there well they made an acquisition about a year and a half ago that hasn't turned out as well as they thought it was so the markets really put them in the penalty box and if you look at kind of the the long-term growth of this area and a new CEO in place it's really kind of the value opportunity of a company that has some good products you know I look at a lot of these guys and the Orthopaedic companies had issues with the Affordable Care Act because they were heavily penalized they didn't go along from the get-go now the concern is really about drug prices but is there anything that pops up in regulatory land that makes you worry about these or do you think these guys finally get to skate below the rate I think they've already felt negative pricing year-on-year 5% of spending in healthcare is on medtech so there's an opportunity here for them to kind of quote escape underneath all this rhetoric and also prove that they can actually increase earnings and use technology and that's another part that we like this company because technology really helps them with productivity and international growth so I think there's surely they're in a any slowing economy which obviously we're not seeing that we may at some point but these for some reason people do put put off some of this surgery in sloka but you don't foresee that well I think when you've got issues the hips and knees and you get are you looking at me and how do you know do I limp around like that you see me cause also the golfers problem it is on the left side so as people get older they want to be more active and this is also an international play forty percent of the revenues come from overseas so as people you know are more coming into middle market that's kind of an area let's talk x-ray that's the symbol DENTSPLY it's up forty-eight percent it was down fifty percent last okay okay so one-third of all dental expenses are cash pay so if you look at kind of where dental is going again using technology and also by the way insurance doesn't play a big part of dentists as well because people will go to the dentist when they need it now in a slowing economy yes things will get put off but another turnaround story company that's got global exposure and you CEO in an area that we don't really need to watch kind of what's going on in macro land whether you know although it seems like you've got a real age a demo story and all your pics today and then you have personal Mars to but these are all in an aging population it would seem that this is that your biggest macro factor in this or not necessarily I think macro factor in the sense that this is also undervalued sector out of favor of Bristol's down eleven percent this year they're not getting any credit for the Celgene acquisition that's about to happen huge cash flows coming you know oncology products down the pipeline which people are not giving them any credit for basically saying hey guys you got to prove that these stocks are gonna are gonna work I like the de Bristol story just because it's not a me two stories they're not making similar drugs to the what are they out there already and if any of these new drugs come on the stuff could really reflect it eleven times earnings very solid dividend as well and a lot of costs there too so it's not necessarily the aging is but all healthcare in health care is you think this is worries about what the quality to Democrats so much negativity on this sector that if you're going to look for opportunity in the market especially with turmoil going on with tariffs and you're going out with global geopolitical issues this is a part that I think investors can you know the next couple years do well on and then we can also invest in the other sectors but I think if you're looking for opportunity out of favor here a couple of stock picks that crystal Myers you don't think gets hit by any of the regulatory drug I do but it's you know in 11 times earnings you're buying something that's pretty heavily discounted already and again if it's not a me-too drug I think people will pay for these drugs as well so you're definitely gonna have someone need to drug meaning they're not copying what else is out there these are drugs that are distinct in what they're doing in oncology and the cancer area Andrew you're you're reading the journal now which is good so I I know that but did you I also asked you to start reading drudge did you start looking at that or did you didn't see this today you know what I love the drugs are for okay I read it every day okay the reason I bring up Breitbart okay like you well you should but you should but the reason that I bring it up is what a top story on Drudge on the Left human and this is and it's a CNBC piece by Tom Frank okay it's the top one of the top stories human lifespan could soon pass a hundred years thanks to medical technology and if that's from a B of a ant the analysts report about genomics and the strides that are being made and some of the really preventable things that cause quality of life and length of life all those things could be affected to where we are routinely pushing it past a hundred now I don't know if you can what that means well I was gonna mention and I don't know if you can anchor a show past that hundred but it's something to think about if you're for your future to Serrat and others because you're gonna need a lot more money well that's about it and also for knees and shoulders TVs and you know sixties a new 50 and as people get older they want to be the new 45 a thing you can't retire at 65 and live another 40 years right so you need to work longer if that's so you need to care of your body and you also need to invest they carry mind yeah just the Jumbo will do the Jumbo everyday you you

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