As widely expected, the drop in rates of 25 base points on Wednesday, and its forecasts still promote two other rate drops by the end of the year.
Admittedly, the reduction in the rate of 50 bp. In addition, given Trump pressure for lower rates, the Fed is more likely to exceed the market than to disappoint them.
In this context, health care actions could prove to be wise bets. First of all, it should be noted that health care is the least efficient sector in the S&P 500 this year, which suggests that it has more room to develop than other overvalued sectors such as technology.
In addition, there are also several specific reasons for which the drop in Fed rates could benefit from health care actions.
In particular, the lower rates reduce the discount rate applied to future profits, which mechanically increases the evaluation of companies with long -term growth expectations. In the health care sector (NYSE: XLV), biotechnology and R&D companies benefit directly from this phenomenon.
Finally, we must also consider the reasons for the drop in Fed rates. The central bank has lowered the prices not to celebrate the objective of the objective, but to support an increasingly disturbed labor market, which raises a period of economic slowdown.
However, in such climates, health care benefits from stable medical demand and investors turn to actions offering stable growth and stable dividends, a profile often found in the largest health care companies.
What are the best health care actions to buy to take advantage of the drop in Fed rates?
We have decided to find the best American health actions to buy in the coming months, using the Screenner Investing.com. More specifically, we have sought American health actions with a market capitalization of more than $ 1 billion and with a Potential up more than 40% According to the investment of fair value, and an InvestingPro health score of more than 3/5.
Here is what it looks like in terms of screening parameters:
InvestingPro Fair Value calculates an intelligent average of several recognized assessments …
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