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Investing Specialists

10 Health-Care Stocks to Consider Buying Now

Our Ultimate Stock-Pickers continue to load up on health-care stocks.

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By Bradley Meeks | Stock Analyst

Much as we had noted during an early run-through of the holdings of several of our Ultimate Stock-Pickers last month, health care continues to be an area of focus for our top managers. Given that the sector is one of the few areas where our analysts are still finding value, with 19 out of the 49 stocks we currently have rated 5 stars coming from the health-care sector, it didn't come as too much of a surprise. As you may recall from our recent overview of  Vanguard PRIMECAP's (VPMCX) holdings, health-care stocks have been under pressure for much of this year over concerns about the impact that a government-sponsored health-care plan could have on the industry's profitability. The question for investors, though, has been whether or not these near-term issues will derail the long-term positive impact that the aging of the baby boomers is expected to have on the industry. Judging from the recent purchases by our Ultimate Stock-Pickers, the answer appears to be no.

While it would be easy to focus on only the top 10 health-care holdings of our top managers, which currently include 5-star names like  Johnson & Johnson (JNJ),  Pfizer (PFE), and  Merck (MRK), we thought we'd look a little bit deeper into the most recent high-conviction purchases made by our Ultimate Stock-Pickers in the sector. Despite already being the largest health-care holding of our top managers coming into the most recent period, Johnson & Johnson continues to be purchased with conviction, with at least one manager making a new money purchase in the stock. Merck and  Novartis (NVS) are two other top health-care holdings that continue to draw the attention of our Ultimate Stock-Pickers, albeit with slightly less conviction than other purchases in the sector. This leaves us then with seven names that aren't in the top 10 health-care holdings, with almost all of them trading at levels below our Consider Buying price.

The Morningstar Ultimate Stock-Pickers Team does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.