Portfolio Manager Matthew Krajna of Nottingham Advisors says his firm favors the health care sector because of stocks like Johnson & Johnson (JNJ) that offer attractive valuations.
We find health care valuations relatively attractive, but we also see earnings per share growth in health care being higher than the S&P 500 for the coming year. And we think that stocks like Johnson & Johnson, which is the largest holding within the XLV ETF, offer interesting and compelling risk/return outlooks when taken as a whole.
Johnson & Johnson can be viewed as a company that typically offers value-like characteristics. That’s the interesting thing about health care as a sector, as it is this quasi-growth, quasi-value-type sector that has a component of biotech stocks that make up between 15% and 20% of the ETF but also has another slug of traditional value-type names such as Johnson & Johnson that pay higher dividend yields and offer more attractive valuations than the overall market.
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