Cox: Buy Health Stocks Now, Eyes on Novo & Novartis Growth

Key Takeaway

• Financial advisor Jamie Cox recommends buying health care stocks, especially pharmaceuticals, as undervalued investments amid market pullbacks.
• Novo Nordisk and Novartis highlighted for strong growth potential in weight-loss drugs, with analysts predicting an 8% and over 14% price increase respectively.
• Vanguard Health Care ETF (VHT) suggested for broad sector exposure, despite recent dip but positive outlook for 2024.

Market Turmoil and Health Care Opportunities

Amid recent market pullbacks, with investors concerned about the Federal Reserve's interest rate policies, Jamie Cox, managing partner at Harris Financial Group, highlights health care, particularly pharmaceuticals, as a sector ripe for investment. Cox points out that despite the broader market's downturn, health care stocks offer a valuable opportunity for investors to acquire quality companies at lower prices. He emphasizes the industry's current underappreciation by investors, despite significant earnings and potential growth driven by artificial intelligence and the burgeoning weight-loss drug market. Cox's perspective suggests that the health care sector's performance is less tied to interest rate fluctuations, making it an attractive option during periods of market volatility.

Pharma Sector: A Closer Look

Cox specifically identifies the pharmaceutical sector as showing strong promise, likening its current state to the innovation boom of the 1990s. He singles out Novo Nordisk and Novartis as companies with solid investment potential, citing their involvement in the development of blockbuster weight-loss drugs. Despite a mixed performance in the stock market this year, with Novo Nordisk experiencing a slight decline but still up significantly, and Novartis slightly down, Cox's confidence in these companies is supported by analysts' optimistic price targets. FactSet analysts predict an approximate 8% increase for Novo Nordisk and a more than 14% rebound for Novartis. In contrast, Cox is less enthusiastic about Pfizer, noting its underperformance compared to his preferred picks, despite analysts forecasting a near 19% recovery.

Investment Strategies and Analyst Views

For investors seeking broader exposure to the health care sector, Cox recommends the Vanguard Health Care ETF (VHT), which encompasses a range of companies including Johnson & Johnson and Eli Lilly. Despite a recent dip, the ETF's performance in 2024 remains positive, albeit modestly. This recommendation aligns with Cox's strategy of leveraging market downturns to invest in high-quality health care stocks that are currently undervalued by the market. Analyst ratings and price targets for Novo Nordisk, Novartis, and Pfizer further underscore the perceived investment potential within the pharmaceutical industry, despite recent market challenges.

Street Views

• Jamie Cox, Harris Financial Group (Bullish on the health care sector):

  "The amount of money that the health care industry is making is being completely ignored by investors... That’s where we’ve been positioning more and more into."