Traditionally, managed-care stocks have performed better in the fourth quarter, as investors get pricing visibility for the coming year, one portfolio manager said.
Les Funtleyder, Miller Tabak Health Care Fund manager, said initial forays into pricing suggest managed-care companies should have another good year in 2012, particularly on the commercial side.
"Health care is generally considered a defensive area and, given the market action lately, it looks like that's not a bad place to be," he said. "So, we like some of the pharmaceutical stocks like Bristol Meyers and Novartis — you get big dividends and decent visibility on the pipeline."
The economic downturn has had a "surprisingly depressive" effect on the number of patients' visits to health-care providers. This lower utilization rate has impacted managed-care earnings more than unemployment has, Funtleyder said.
While health-care utilization has decreased, health-care prices have increased due to inflation .
In addition to Bristol Meyers Squibb and Novartis , Funtleyder also likes United Health Group and Humana .
He added that he would steer investors away from utilization-sensitive areas, such as medical devices and life-science tools, since he believes they are "in for tough sledding for the next couple quarters."
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Les Funtleyder owns stock in Humana and United Health.