How to profit from aging & healthcare

Article Excerpt

Drug stocks have a special appeal for many investors. They assume that as the baby-boom generation goes through late middle age and beyond, demand for drugs will skyrocket. That’s undoubtedly true. As we’ve often pointed out, however, this leads investors to underestimate the risks in drug stocks. Drug companies often invest tens if not hundreds of millions of dollars to create, test and secure regulatory approval for a single new drug. Even then, it may not manage to recover its investment before its patent expires or a better drug hits the market. To profit from aging and the health care spending that goes with it, you’re better off with high-quality medical device makers, like these three. Hospitals and other health care providers must constantly replenish the products these companies make, so these companies enjoy growing revenues and repeat business. That gives them much steadier revenue streams than drugmakers. In addition, they are reasonably priced in relation to current sales, earnings and dividends. INVACARE CORP…

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