ISHARES DOW JONES US MEDICAL DEV.(ETF) (IHI)

Medical devices have been fantastic the last 5 years. Like tech, we’re there already. PE is 40x, so a lot of the growth has already happened. It’s just too late.

A previous Top Pick that he continues to see good upside for. Since 77% of their cash is outside the US, they have an advantage to repatriate it back with the more beneficial tax rates. This is a space immune to the Amazon competition effect.

(A Top Pick July 7/17 Up 24%). The chart has been great and he still likes it for the demographics – diabetes, joint issues, etc. Worldwide hospital spending is also on a rising spiral.

Buyer or wait for pullback? Healthcare in general is in sweet spot of seasonality, which starts in June. Medical devices is one of the sectors in a secular bull market starting in 2012. Every chance you get, get a good component of healthcare in your portfolio. Secular trend owes a lot to demographics. For medical devices, pharma, biotech it’s a good time to get in from a seasonal and a secular point of view.

He likes the demographics, higher global consumer spending and it has stable end-markets. It will see new product launches.

(A Top Pick July 7/17 Up 22%) A steady growing ETF. It has good diversification to the sector. It captures health, demographic and consumer spending themes, without taking one-company risk.

Think of this as the down the middle pick – good technical momentum with a beta of 1 of high quality holdings. Its revenues growth should be good in the second half of the year backed by good demographics and growth in China.

He likes the diversification with excellent market fundamentals. Aging population, growing obesity rates, emerging market growth, rising hospital spending are all positive. It avoids the drug company negativity.

(A Top Pick Jul 7/17, Up 10%) He likes it from a timing perspective but there are other opportunities out there. There is lots of tailwind, however.

The devices’ space has great secular trends and market demand. There is more uptick in emerging markets. Fundamentally there are a lot of tailwinds. As an example, the cardio device market is projected to grow 20% a year through 2020. It is more defensive and is not as subjective to a policy shift.

This is the trend in the marketplace so buy the trend. People who are aging are going to buy the hips, the knees and get the heart thing done. All of these companies are expanding into Latin America and China.

Do medical stocks have seasonality? There are a couple of specialty healthcare ETFs that are just coming into their seasonal strength. One is iShares US Healthcare Providers (IHF-N) which has seasonal strength from now, right through until the end of January. The other is iShares US Medical Devices (IHI-N) with seasonal strength from the end of November until the middle of February. Both of these have very, very strong seasonality during that time.