When the economy slows, health-care stocks tend to shine, 6.21.11

Investment firm’s analysts expect health care to outperform in months ahead, due partly to the economic slowdown

BERWYN, Pa., June 21, 2011 -- When the economy struggles, health-care stocks have tended to generate superior performance historically. According to the latest Sector Focus commentary by Turner Investments, the current period of economic sluggishness may be no exception: Turner expects health-care stocks to produce good relative returns in the next few months. In fact, health care has been the best performer of the nine sectors in the broad-based Russell 3000 Index for the year to date through May 31.

Turner, an investment firm based in Berwyn, Pennsylvania, publishes Sector Focus commentaries monthly as part of the continuing efforts of its five teams of security analysts to monitor the market sectors for its growth-stock portfolios.

Titled Why health-care stocks may shine in the near term, the piece was written by five Turner analysts who cover the health-care sector: Theresa Hoang, global security analyst; Heather Flick McMeekin, portfolio manager/global security analyst; Vijay Shankaran, senior portfolio manager/global security analyst; Richard Simons, portfolio manager/global security analyst; and Frank Sustersic, senior portfolio manager/global security analyst.

According to the analysts, health care is a "defensive" sector that benefits from relatively stable demand. They note that "people typically spend on health care to maintain or restore their health when they need to, no matter how the economy is behaving. . . . So while the U.S. economy remains stuck in a soft patch, in what we characterize as a mid-cycle slowdown, we think health-care stocks are likely to continue to perform well."

Also, health-care stocks in the near term may benefit from these three catalysts: 1) they have tended to do well at this time of the year, from May to October, when stock-market returns tend to be anemic; 2) institutional portfolio managers appear to be increasing their weightings in them in response to their recent outperformance; and 3) the health-care sector’s fundamentals, such as earnings growth and return on assets, are almost uniformly strong.

To read this June 2011 Sector Focus in its entirety, click on this link to the Turner Investments Web site:http://www.turnerinvestments.com/SectorFocus. Or call 484.329.2407 for a free copy of the piece.

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The views expressed represent the opinions of Turner Investments and are not intended as a forecast, a guarantee of future results, investment recommendations, or an offer to buy or sell any securities. There can be no guarantee that Turner will select and hold any particular security for its client portfolios. Earnings growth may not result in an increase in share price. Past performance is no guarantee of future results.

Turner Investments, founded in 1990, is an investment firm based in Berwyn, Pennsylvania. As of March 31, 2011, we managed more than $18 billion in stocks in separately managed accounts and mutual funds for institutions and individuals.