Karen Firestone's Top Stock Picks: Amgen and HealthEquity

Health Equity Investment Rationale

• 🎯 Health Equity, a health savings plan business, saw its stock decline due to a cyber attack on a partner.
• 💡 Despite the dip, the investment committee believes the stock is attractive, citing a long runway for future growth and supportive administration.

Amgen: A Deep Dive

• 🔬 Amgen is highlighted for its attractive balance sheet, strong pipeline, and several cancer drugs, including bymeritusab.
• 💰 The stock is considered cheap at 14 times earnings with a 3% yield, making it an appealing investment.

Healthcare Sector Outlook

• 📈 The healthcare sector, which has underperformed for two years, is showing signs of sustainability due to attractive multiples and emerging pipeline drugs.
• ⚠️ Companies are recovering from a period of losing drug exclusivity and are now seeing renewed revenue growth, with Amgen showing significant recent growth.

Biotech vs. Big Pharma

• 💡 The investment committee favors biotech companies due to their cancer drug pipelines and growth potential, while being underweight on some big pharma due to COVID-related overhangs.
• 💰 Companies like Gilead, Amgen, and United Healthcare are favored for their pipelines, valuation, and balance sheet strength, especially in a rising rate environment.

Valuation and Growth Drivers

• 📊 Many healthcare stocks, particularly in biotech, offer attractive valuations and strong growth prospects, driven by new drug approvals and pipeline advancements.
• 💰 Companies with strong balance sheets and free cash flow are well-positioned to navigate rising interest rates without needing external financing.