Health care achieved something it hasn’t done since late 1998. These names on our list are likely to gain the most.

The Current State of the Healthcare Sector

It’s interesting to note that the S&P 500’s healthcare sector is experiencing something quite rare—something that hasn’t happened very often over the last three decades. This could lead to substantial historical gains. We’ve been discussing subtle shifts among XLV names into smaller segments for some time, highlighting companies like Alnylam, Gilead, Amgen, and AbbVie. These shifts are becoming more apparent as investors are now taking a closer look at a previously overlooked part of the market. Stocks are on the rise, more participants are joining in, and the attention is growing. So, let’s dive deeper into what’s happening.

Sector Overview

As of November 24th, there are 174 stocks listed among the best in the market. The healthcare sector had a notable performance last week, with some of the world’s key stocks dropping over 20%. Bitcoin briefly approached the $80,000 mark, and Meta fell below its 200-day moving average for the first time since April. Despite the increased volatility, this could actually serve as an opportunity for investors to reassess their portfolios. It’s not all negative; there are reminders out there, like Jim Cramer’s saying that “there’s always a bull market somewhere.”

On Friday, the healthcare sector saw significant milestones. Notably, 21% of XLV ended the day at a 52-week high—something we haven’t seen since the summer of 2024. Another striking statistic is that every stock in the XLV sector recorded gains for the day. Out of the 34 days since XLV was launched in December 1998, this occurrence has only been seen 34 times before. Historical patterns suggest that after such complete participation, the following returns tend to be quite strong, with XLV averaging 4.5% over three months, 8.1% over six months, and 13.2% over a year. In contrast, days without full participation only yielded average returns of 2.1%, 4.1%, and 8.8% during those same timeframes. This implies a higher likelihood of price increases during these full participation periods.

Highlighting Top Stocks

Among the top performers are 22 names within the Life Sciences Tools & Services group, including Mettler Toledo International (MTD), Thermo Fisher Scientific (TMO), and Agilent (A). Mettler Toledo stands out as a leader in precision instruments and laboratory measurement solutions. It serves various industries, including pharmaceuticals and food, and accounts for 56% of its revenue from laboratory equipment. It’s fascinating to note that Mettler has recently reached new 52-week highs, breaking a five-year downtrend in its pricing chart. Analysts have raised their price targets significantly due to the company’s growing margins and strong earnings.

Then there’s Thermo Fisher, the largest player in this segment, with a market cap of $220 billion. While it hasn’t yet reached a breakout, there are positive indicators, and I plan to keep an eye on any emerging catalysts. Agilent, with a market cap of $42 billion, is also one to watch. Spun off from Hewlett-Packard in 1999, it has significantly outperformed since its inception. Although it hasn’t truly broken out yet, the technical indicators suggest a potential upward trend.