Since the start of the year, health care has been a leading sector for the economy. It’s a defensive sector, and tends to perform well over time. What’s more, it tends to have some insulation from global trade, providing some safety amid the current tariff fears.
As long as this sector continues to lead, investors can likely see reasonable returns on health care stocks. And it will likely provide more stability compared to other sectors getting whipsawed right now.
In the health care space, Johnson & Johnson (JNJ) is a steady player. JNJ just beat on its latest earnings buy about 7%, and boosted its full-year sales forecast.
Revenues are up 5% over the past year, and shares trade at a reasonable 15 times forward earnings. JNJ also sports a 15% profit margin, a solid level for its industry.
Action to take: Investors may want to pick up some J&J shares here, and use any further market weakness to add to the position.
JNJ also pays a 3.2% dividend at current prices, and has a long history of raising its payout over time. Long-term investors may like shares for that future income potential.
For traders, the July $165 calls, last trading for about $2.10, could see mid-double-digit returns or better if JNJ shares recover with calming markets over the coming weeks.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.