Daily Traders Edge

These high-flying life sciences stocks make Netflix and Amazon look dull – CNBC

September 20
14:51 2017

The giants of the internet economy are typically cast as the leading fetish objects for growth investors. But compared to the TAMP stocks, FANG looks a bit dull.

What’s TAMP, you ask? That would be Thermo Fisher Scientific, Agilent, Mettler-Toledo and PerkinElmer, just a few of the seldom-discussed names that have powered the obscure S&P 500’s life sciences tools & services subsector to a 41 percent year-to-date gain.

By comparison, FANG – Facebook, Amazon, Netflix and Google parent Alphabet – are up less than 36 percent this year on an equal-weighted basis.

The life-science tools group — which also includes Illumina, Waters and Quintiles IMS — totals more than $170 billion in market value (about equal to the size of Intel). The companies fall within the healthcare sector, but they neither discover cures nor deliver care. They provide lab equipment, testing supplies, analytical devices and services to the pharmaceutical and biotech industries, as well as some chemical and industrial customers.

Part of their appeal to investors in an aging and slow-growing world: They profit from the volume of new-drug investigations and lab tests, favorable demographics and the total amount of healthcare delivered globally but they don’t have direct regulatory risk from drug-price controls or an Obamacare repeal.

It helps, too, that the companies generally are steady long-term performers that have done many bolt-on acquisitions in their chosen product areas and tend to convert mid-single-digit sales growth into low-double-digit per-share earnings expansion.

Continue Reading At CNBC

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