The pall of federal laws expanding health insurance availability while capping premiums has kept investors away from the health-care sector. But two analysts told CNBC Thursday there are still some companies worth buying.
"If you take a look at the market overall and look at some of these stocks, whether it’s a Pfizer or a Bristol Myers ,or a stock like Amgen , these stocks exhibit incredibly high free cash flow yields [and] they have a 4.5 percent to 5 percent dividend," said John O’Donoghue, head of equities at Cowen & Co. "They’re fairly well positioned right now to be bought."
Les Funtleyder, portfolio manager at Miller Tabak, said managed-care companies such as HMOs are "good buys" because they benefit from lower utilization, or fewer people actually using the health insurance. He likes Unitedhealth Group and Humana
, as well as what he called cost controllers, such as Intuitive Surgical .
Funtleyder said he'd avoid any company "that needs volume to generate profits," such as medical technology companies. In that group, he includes Medtronic "or some of the biotech names, because they look like they're in the crosshairs of the government."
Cowen's O’Donoghue said he would "stick to the big caps" in this sector, including Johnson and Johnson , ExpressScripts
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Disclosure information was not available for Les Funtleyder, John O'Donaghue or their companies.