Paul MacDonald's Top Picks: February 3, 2022
BNN Bloomberg
Top picks from Paul MacDonald, chief investment officer, Harvest Portfolios Group
MARKET OUTLOOK:
Broader market volatility has increased in the shorter term, driven by persistent inflation, supply chain congestion, heightened geopolitical risks and concerns about significantly higher U.S. interest rates.
While we believe growth remains intact for the broader markets, it is decelerating and is more susceptible to some of these exogenous risks that have increased in the shorter term. This has caused market gyrations to be exacerbated as investors reposition between areas such as high growth, value, offensive and defensive or small cap and larger cap.
We believe the companies and areas of the market that have high-quality financial metrics, visibility into their operations and financials, exposure to longer term secular growth, and attractive valuations are well positioned for 2022. Against this macro backdrop, large capitalization healthcare companies are well positioned.
There are three primary long-term drivers for the healthcare sector: Aging populations, technological innovation, and growth from developing markets, where there is a disproportionate share of increased wealth expended on healthcare needs.
There have been several positive shorter-term factors that we believe improved the sentiment and attractiveness of the sector since 2020, prior to the onset of the pandemic. Firstly, extreme political rhetoric seen pre-election throughout 2019 is lower as Democratic policy initiatives, including those in the Build Back Better bill, are more centrist in nature with potential outcomes well known. This, coupled with the healthcare industry’s commitment to finding treatments and vaccines for COVID-19, has improved public perception and investor sentiment. Lastly, healthcare is known for its superior good status and has often performed well during uncertain times.