A Health Crisis Makes Health Stocks Uniquely Crash Resistant

Hilary Kramer

Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street.

This week saw the continuation of the pattern we’ve seen throughout April, with stocks gradually digesting truly horrific economic data as the COVID-19 crisis unfolds.

The economic data remains nebulous. We’ve seen 22 million people laid off and early indications of a 12% decline in gross domestic product (GDP) in the current quarter.

But at least the medical situation finally seems to be plateauing. People with serious COVID-19 symptoms are no longer coming into emergency rooms at an exponentially increasing rate.

And with that in mind, it makes sense to start a defensive portfolio with the biggest health care stocks. After all, while the medical side of the economic landscape has been tested, the hospitals are holding up better than many investors feared.

We can’t gauge the economic dislocations that are ahead yet. However, we know the medical situation is already seeing daylight. That’s a great strategic argument for medical stocks.

America 2.0, Health Care Style

We’re going back to basics here and on my Millionaire Makers radio show over the next few weeks. Have you been listening? (Click here for recorded episodes and local stations.)

My recent discussion revolved around food and the retail channels that distribute it. We have the breadbasket economy covered.

As you know, I love the “Big Food” stocks and the smartest delivery networks. People have learned to eat at home. Many have stopped going out to shop, electing instead to have their groceries delivered.

Likewise, “Big Health Care” is in a relatively strong position as we look toward the post-COVID-19 economy. I actually see positive earnings growth for the sector this year.

Admittedly, margins are under pressure. It’s expensive to run emergency rooms in a pandemic. Discretionary medicine has been frozen in the meantime, locking down many once-profitable specialties.

But people will do what it takes to keep refilling prescriptions. I see health care revenue expanding 6% beyond its 2019 levels this year, which, again, is heroic stuff compared to a projected decline for the S&P 500.

I would not be shocked to see S&P 500 earnings plunge 15% this year, effectively erasing the benefit of the corporate tax cuts. That’s going to sting, but it’s far from the end of the world.

Either way, even a little positive movement will feel amazing in that environment. Outside Big Tech and utilities, everything else in the market is looking towards a year of stagnation at best.

We’re moving to the sidelines on large segments of the consumer discretionary sector as well as energy and a lot of manufacturing. Those stocks simply aren’t worth our attention right now.

Johnson & Johnson (NYSE:JNJ), on the other hand, is worth our interest. The stock is up 3% year to date (YTD) and yields 2.6% right now. This is enough to replace Treasury debt in part of your portfolio, while also providing you with a growth opportunity.

When 2021 rolls around, I see JNJ handing shareholders 18% year-over-year growth. That’s only a few months away, with that dividend justifying a little patience in the meantime.

UnitedHealth Group Inc. (NYSE:UNH) is also a decent alternative to Treasury bonds with a 1.6% yield. It is down only 2% YTD. Again, that’s remarkable resilience after the S&P 500’s 13% swoon.

It isn’t growing fast, but it isn’t collapsing either. These are the kinds of stocks that will form the backbone of my Value Authority as the year goes on.

And once you have the foundation in place, it’s time to reach for growth. That’s where Baby Biotech comes to the table. That’s what we’ll be talking about soon.

share on:

Like This Article?
Now Get Mark's FREE Special Report:
3 Dividend Plays with Sky-High Returns

This newly-released report by a top-20 living economist details three investments that are your best bets for income and appreciation for the rest of the year and beyond.

Get Access to the Report, 100% FREE

share on:


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader


Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor

George Gilder

George Gilder is the most knowledgeable man in America when it comes to the future of technology and its impact on our lives.  He’s an established investor, bestselling author, and economist with an uncanny ability to foresee how new breakthroughs will play out, years in advance.

Product Details

  • Technology Report
  • Technology Report PRO
  • Moonshots
  • Private Reserve
  • Millionaire Circle


DayTradeSPY was founded by head trader Hugh Grossman, a retired internal auditor for a Fortune 500 company. After years of first-hand experience trying out one trading strategy after another, Hugh instead developed his own trading system centered around day trading SPY options. That’s it... Nothing else.

Product Details

  • Trading Room
  • Pick of the Day
  • Inner Circle
  • Online Workshops