Published Thu, 21 Apr 2016 08:10:51 -0400 on Seeking Alpha
Healthcare & biotech exposure can play a role in every balanced portfolio, not only because it provides diversity, but also because of its fast growth, which is generally not dependent on the state of the economy. Companies in this sector are able to increase their revenues even during uncertain times, such as a recession. These are deemed as non-cyclical stocks, so they are not as much affected during economic downturns.
The Biotech Sector: An outstanding performer for long-term investors
Over the past 7 years, the Biotech Sector tracked by the iShares Nasdaq Biotechnology ETF (Nasdaq: IBB) has been one of the most profitable and best performing sectors. The index is up 331% since 2009 compared to the S&P 500, tracked by the ETF SPDR S&P 500 ETF (NYSEARCA: SPY), which is up 156% for the same period. The Biotech index IBB has outperformed the S&P sector by over 120%. This outperformance includes the effect of the recent selloff in Biotech stocks.
After reaching its all-time highs in July 2015, the iShares Nasdaq Biotechnology has seen substantial declines. The selloff was quite severe, resulting in IBB losing over 28% of its value.
The reasons behind the selloff in the Healthcare/Biotech Stocks
The recent biotech pullback was the result of multiple factors. The following are the reasons for this selloff:
High Valuations: Investors in general felt that valuations were getting stretched. High valuations, especially for a few highly publicized... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|H&Q LIFE SCIENCES INVESTORS||16.51||0.0||0.00||0.00||9.00|
|VALEANT PHARMACEUTICALS INTERNATIONAL||16.39||4.2||3.90||0.00||2.05|
|SPDR S&P 500 ETF||298.83||0.0||0.00||5.42||1.81|
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