With less than a month until the election and Democratic challenger Joe Biden opening up a wide lead, the politically sensitive health-care sector is on watch.
Boris Schlossberg, managing director of FX strategy at BK Asset Management, said a blue wave where Democrats take the White House and Senate while holding the House is not a foregone conclusion. However, should it happen, he sees benefits for the health-care sector.
“If you were to sort of forecast that, yes, you get a big blue wave, Biden wins and you get a big a Democratic sweep, then I think it’s actually not bad for the health-care sector, because the ultimate end goal here is that there will be more people having health care, and there will actually be a bigger buyer of health care in the form of government,” Schlossberg told CNBC’s “Trading Nation” on Monday.
While he anticipates short-term headwinds for the sector in the case of a Biden win, he does see one group that could weather the volatility.
“As far as sort of protecting your portfolio and kind of looking for places where you’re not really going to be hit by any kind of knee-jerk reaction, I really like the vaccine makers because my view is that if Biden wins, he’s going to essentially create a World War II-like effort to inoculate everybody and have the state pay for it,” said Schlossberg.
He highlights French pharmaceutical company Sanofi as one potential standout. Sanofi shares have underperformed the broader sector so far this year – the stock is up 2% in 2020 compared with a more than 6% gain for the XLV health care ETF.
Bill Baruch, president of Blue Line Capital, is taking a wide approach to the group, spotlighting opportunity in ETFs that cover a broad basket of health-care stocks.
“I like stocks that are making new all-time highs and IBB, the biotech ETF, as well as IHI, the medical devices ETF, have both been making new record highs [this year],” Baruch said during the same “Trading Nation” segment.
He likes the IBB breakout above $133, an area that marked the previous 2015 high. However, if it were to come under some pressure, he points to $125 as a buy level. The ETF traded at $144 on Tuesday.
As for the IHI ETF, he says $280 is an area of support that he sees as a buy level. That ETF traded at $313 on Tuesday.