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Opinion: Health-care stocks may be your best bet today

Gilead Sciences has increased sales per share by 73% over the past 12 months, while more than doubling earnings. But the stock trades cheaply, at 9.2 times the consensus 2016 EPS estimate.

Health care tends to be a top-performing sector of the stock market. But this year is different, which means you might be able to buy shares cheaply and profit handsomely in the long run.

Here’s how the 10 sectors of the S&P 500 Index SPX, -0.20% have performed this year, along with three-, five- and 10-year total returns, with dividends reinvested:

S&P 500 sector Total return - 2015 Total return - 3 years Total return - 5 years Total return - 10 years
Consumer Discretionary 4% 66% 148% 174%
Health Care 2% 82% 151% 168%
Consumer Staples -3% 41% 93% 172%
Information Technology -3% 39% 98% 133%
Industrials -4% 40% 96% 127%
Telecommunications Services -7% 3% 51% 94%
Financials -9% 51% 71% -4%
Utilities -11% 30% 64% 90%
Materials -15% 17% 42% 95%
Energy -22% -11% 26% 40%
S&P 500 -4% 42% 90% 98%
Source: FactSet

The consumer-discretionary sector has performed best this year, and we took a detailed look at this group earlier this month.

The health-care sector has done nearly as well, but during August, when the S&P 500 declined 6.3%, it sank 8.1%, making for the worst performance of all the sectors, according to S&P Capital IQ.

What’s surprising is how well health-care companies boosted earnings. Here are the 10 sectors again, this time ranked by weighted growth of earnings per share:

S&P 500 sector Second-quarter EPS growth
Health Care 14.71%
Telecommunications Services 11.84%
Consumer Discretionary 10.45%
Financials 9.64%
Materials 7.76%
Information Technology 6.15%
Utilities 4.45%
Consumer Staples 1.70%
Industrials 0.11%
Energy -55.76%
S&P 500 0.14%
Source: S&P Capital IQ

S&P Capital IQ senior analyst Lindsey Bell said in a report Wednesday that it’s “hard to reconcile the sector’s recent decline.” She said health care has been a driver of earnings growth “for the past several quarters, posting double-digit growth in each of the previous five quarters (including growth of more than 20% in...


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