HEALTHCARE PORTFOLIO STOCK 1

Healthcare portfolio stock

by

[your official name]

MS, Webster University, 2022

BS, [university], 202X

Portfolio Project

Webster University

December 2022
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Table of Contents

Section 1: Brief overview of stock.......................................................................................

Industry Factors for Stock..............................................................................................

Reason for Stock Selection............................................................................................

Steps to Gather Data......................................................................................................

Measures used in Making Recommendation...............................................................

Presentation of the Findings.........................................................................................

Recommendations for Action......................................................................................

References..........................................................................................................................
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A brief overview of healthcare stock

Stock denotes a general term that describes the certificates of ownership to any

company. To own a stock for this case means that one owns a company, and for this

research paper, I choose to research the investments made in the healthcare stock sector.

The Johnson and Johnson company invests in medical devices, pharmaceuticals, and

consumer healthcare. For value investors, Johnson and Johnson is an excellent stock to

make their investments since general financial health and the prospects of growth of

Johnson and Johnson have demonstrated their potential not only to overperform but to

outperform in the market.

Investors are advised to consider having their portfolios in healthcare stocks

because the healthcare sector has historically risen over the world's market in the past

years. It has demonstrated adequate performance in the field compared to the larger

market. According to ( Fitchett & Grossoehme 2021), healthcare stocks have managed to

hold up despite the volatile terms for the stock market.

For Johnson and Johnson, all the portfolio companies making their investments

with them are subject to receiving the same. Te commitment is unwavering in such a case

( Krebs, 2021). Such commitment drives the art of science and technology toward

translating for the patient's benefit. Johnson and Johnson make a long-term approach to

deploy their family of companies' full capabilities, including discovery, development of

clinics, regulatory affairs, the art of commercialization, and manufacturing of the drugs

( Krebs,2021).
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Industry Factors for Stock

For stock industry factors, many pending factors tend to affect the market. The

performance of the industry is one of the reasons. For this, most time, the price of the

stock of the different companies but for the same sector will automatically move tandems

with each other. Since the market conditions are known to impact the company in the

same industries and the same manner, the impact will be the same ( Mbarki &

Saeed,2021). However, the company's stock price will be advantageous from any piece of

insufficient information on their competitor's site if both companies compete in the same

market ( Mbarki & Saeed,2021).

Additionally, the sentiment of the investor or their confidence can easily cause the

market to fluctuate, going up and down. Nevertheless, this can cause the stock price to

either rise or fall depending on the current situation. ( Phuong et l,2020) states that the

stock value in the market will be affected by the direction the market takes. That is, it will

either fall tremendously or rise tremendously.

For instance, in a pharmaceutical market, the drug is vital in the market where the

prices are tremendously rising, and there is growth in the investor's confidence ( Mbarki

& Saeed,2021). There is always a tie to the economy's recovery, and the investor's

optimism is also fueled. While for medical equipment, the equipment is weak and the

prices of the stock are tremendously falling, and the investor has zero confidence in it.

This case always occurs when there is a recession in the economy, and the unemployment

rate is very high due to rising prices ( Mbarki & Saeed, 2021).
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The economic factors also affect industry factors for the stock—for instance, the

interest rates in the banks. The banks have a choice to lower or raise their rates of interest

to stabilize the economy. We can call this the monetary policy. For an occasion in which

a company will borrow some funds to expand their business or to improve their business

economy, the costs of debt will be affected by higher deficits. And will cause the profits

and dividends of the company to be paid to their shareholders and profits to reduce

( Bouri, Naeem & Nor,2020). As a result of this, the share price might even drop. The

higher interest rates might sometimes cause the goods paid by the investments to be more

attractive to those investing in it than the available stock ( Bouri, Naeem & Nor,2020).

Similarly, the economy's outlook is also a factor under economic factors. If

predictions are made, the country's economy will expand, and stock prices will rise. At

some point, those investing might buy the idea of buying more stocks with the fact in

mind that they will be able to see their profits in the future. The stock prices will also

increase if there is quite an uncertainty in the economy's outlook. Those investing might

go ahead to reduce their buying or start to sell.

Inflation will also affect the stock industry; in his case, inflation denotes high

consumer prices. When the costs of the consumer are high, the sales are slowed down,

and the profits are reduced. Since the higher their fees, the higher the rates of interest. For

instance, a Canadian bank might take the step to raise its interest rates to slow down the

rate of inflation, and the changes made will automatically bring down the inflation costs.

However, in the case of commodities, their prices might rise when the inflation rate is

high.
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While inflation affects the stock industry, deflation also affects the stock industry.

The falling prices signify the lowering of profits that the companies receive, and the

company's economic activity decreases. In this case, the stock costs might go down, and

those investing might then begin to sell their shares and move to fixed-income

investments, such as bonds ( Bouri, Naeem & Nor,2020). Lowering the rates of interest

for this case may serve as an encouragement to the people to go ahead and borrow one.

The ultimate goal is always to increase economic activities and spending ( Bouri, Naeem

& Nor,2020).

Economic and political shocks are also factors that affect the prices in the stock

industry. The changes that occur worldwide, either economically or politically, affect the

stock prices. For instance, a rise in energy costs can lead to an increase in the company's

sales. At the same time, any act of terrorism and theft will lead to an economic downturn

and thereby a fall in stock prices.

When there are changes and amendments in the policy of the economy, there will

be an effect on the stock industry. When nee governments come to power and take over,

the possibility that new approaches might be made is very high. The changes made by the

policies might be for the benefit of stock or might be for the loss. ( Heidari Refah Kahriz

& Mohammadzadeh,2019) States that they might also lead to changes in the rates of

inflation and interest that might affect the stock prices.

Reason for Stock Selection

Selecting the healthcare stock is problematic because it involves human beings'

lives. The healthcare sector represents approximately 13% of the world economic market.
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Therefore people that have a lower weighting in their locations central place might get

this as a better chance to have the healthcare sector as an additional exposure factor since

the healthcare group is always a group that is quite defensive ( Kuupiel et al.,2019). Such

defensive groups tend to outperform in general performance when the public market

proves indecisive or weak ( Kuupiel et al.,2019).

Additionally, the recovery speed of the economy from the global COVID-19

pandemic brought the world into a transition to midcycle from the early. With this comes

equity to the world market leadership that comes with lots of shifting. Shifting in the

world's market leadership tends to support stocks of higher quality in the healthcare

sector and many other industries.

Consequently, in the United States, the healthcare sector forms one of the most

expensive markets in the world. The changes that were brought in by the impact of

COVID- 19 are suspected to drive a permanent shift in the significance of digital health

and telemedicine ( Heidari Refah Kahriz & Mohammadzadeh,2019) states that it has

been researched and found that this will therefore provide investments opportunities to

both public and private sectors even though there are many other factors, that is the

external factors that will bring rise to telemedicine.

Being a defensive industry, with returns that have always been consistent and

generally uncorrelated regarding the overall stock market, the healthcare industry's stock

aims to diversify the economy. Lastly, choosing healthcare stocks is advisable since they

grow faster in the financial world. The aging population is prone to many chronic

diseases and conditions ( Iwu et al., 2020). Their treatments are always technological in
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the telehealth sector; therefore, it tells more of how much they are likely to spend to cure

disease. For instance, in the United States healthcare sector represents more than 10%,

and five of the 30 stocks of Nasdaq in the industry of Dow Jones average industrial

healthcare and health-related ( Iwu et,2020).

For the same case, the healthcare sector remains more defensive and attractive

than any other, attracting investors to a healthcare stock portfolio. The healthcare sector

is the best based on the metrics standards and their valuation. It is given a 15.7 rating

regarding earnings made against the long-term gains.

Steps to Gather Data

The healthcare stock data was gathered and analyzed for our portfolio to choose

from. Relevant data from the registries, keen monitoring of the environment, surveys

from the healthcare providers, and manual observations were made to obtain relevant

data. Word was done during one of the ward-based rounds by some investors before

making investments. They were able to observe some of the few things in the healthcare

sector that were not available in all the other sectors that if they were improved, they

were likely to be of more profits.

According to a survey done with the healthcare providers, the interviewers

revealed that annually, the number of patients admitted to the hospital is over a million

( Mishra & Mishra, 2020). Under the same, the survey still states that more than fifty

percent of the patients are old and suffer from chronic diseases requiring much attention.

On the same note, they need technological treatment that is quite expensive for this case (

Mishra & Mishra, 2020)

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For instance, cancer patients must undergo continuous treatments to receive

complete treatment. The chemotherapy and radiotherapy sessions they require are pretty

expensive for this case. Diabetics and other issues related to the liver and the brain are

also quite expensive in this case. The number of surgeries performed earlier is also a lot,

and since surgeries cost a lot of money, if the investors make their investments, they will

likely obtain more profits.

The relationship systems that exist between the customers and the management is

what we term CRM. CRM system tends to generate the data of the patients and manages

it. Reports regarding the same are generated, and various issues are analyzed. Information

on the same is revealed, and then the analysis is made. Similarly, the electronic health

record also collects the data from the systems and then analyzes the patient's data, thereby

generating deep insights.

The mobile applications that are the software pieces tend to run on the mobile

devices and can make a connection for clinicians and patients as well is used by patients

to record their data. Data is aggregated and accessible from various databases ( Bouri,

Naeem & Nor,2020). When custom software is needed to build one, the techniques might

be expensive, but this is a valuable tool for medical data collection. Most of the time, the

obtained from these processes are the ones that the analysts use to come up with different

findings and some decisions ( Bouri, Naeem & Nor,2020).

Steps used in Making Recommendation

To make better recommendations for the research above on the healthcare stock

portfolio, the factors that affect this type of stock should be thoroughly analyzed first
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before coming up with suggestions that are the recommendations. After collecting

enough data for the research, the data is analyzed, and the information obtained is then

discussed, that is, the findings of the report and, thereby, recommendations made.

To make meaningful and blissful recommendations, the investors are advised to

consider having their portfolios to healthcare stocks because the healthcare sector has

historically risen over the world's market in the past years. It has demonstrated adequate

performance in the field compared to the larger market. The healthcare stocks have

managed to stoically hold up even during the volatile terms for the stock market.

Presentation of the Findings

According to the research, choosing a healthcare stock is difficult, significantly

when it affects people's lives. The healthcare industry is devoted to 13 percent or so of

the global economy. Because the healthcare industry is typically a relatively defensive

group, people with a lesser weighting in their location's core place could see this as a

better opportunity to have the healthcare sector as an extra exposure element ( Mishra &

Mishra, 2020). When the overall market proves weak or uncertain, these defensive

groupings often outperform overall performance ( Mishra & Mishra, 2020).

As a result, the healthcare industry in the United States is one of the most costly

in the world. The changes brought about by the influence of COVID-19 are expected to

result in a permanent shift in the importance of digital health and telemedicine. It has

been discovered that this will create investment possibilities for both the public and
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commercial sectors, even though other additional variables will contribute to the rise of

telemedicine.

The healthcare business's stock attempts to diversify the economy as a defensive

industry, with returns that have always been constant and largely uncorrelated compared

to the broader stock market. Finally, picking healthcare stocks is highly recommended

because they increase at a higher rate in the economic sector. Because of the aging

population, several chronic illnesses and ailments are becoming more prevalent. In the

telehealth business, their therapies are usually technical. Thus it informs me more about

how much they are likely to spend on curing a sickness.

Furthermore, the economy's rapid recovery from the worldwide COVID-19

epidemic shifted the globe from early to midcycle. With this comes equity in global

market leadership, with a lot of moving. Turning global market leadership tends to

promote higher-quality equities in healthcare and many other industries.

Recommendations for Action

Since market circumstances influence businesses in related industries, these

businesses would also feel this impact. However, if two firms are competing for the same

market, any unfavorable information on the side of their rivals would undoubtedly benefit

the price of the company's shares. It is highly recommended that the investors be creative

enough to come up with ways to have more investments in more than one company

( Mbarki & Saeed,2021). And the companies in which they have their assets should be
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highly competitive. Highly competitive companies offer a broader view of the world's

market ( Mbarki & Saeed,2021).

The investors should, however, be careful of their emotions. Their emotions affect

the market either positively or negatively. Furthermore, investor emotion or confidence

may easily lead the market to fluctuate or swing up and down. Nonetheless, depending on

the present scenario, this might show the stock price to climb or fall. The market's stock

value will be impacted by its direction, which means it will fail or rise dramatically.

( Mishra & Mishra, 2020) states that the investors should keep a positive attitude for the

same, which will help them focus on the market better.

Higher debts will affect the expenses of debt for an occasion when a corporation

borrows some cash to develop their business or boost their business. According to

( Mishra & Mishra, 2020), as a result, the company's earnings and dividends are given to

shareholders, and its profits will be reduced. As a result of this, the share price may even

fall. Furthermore, higher interest rates may make the interest paid by investments more

appealing to individuals investing in them than the stock that is accessible.

In this instance, the stock price may fall, and investors may begin to sell their

shares and shift their assets to fixed-income instruments, such as bonds. This situation's

reduction in interest rates may encourage people to borrow one. The ultimate purpose of

this is to stimulate economic activity and expenditure. It is recommended that the

investors and the company at large have their eyes fully kept on focus at the world

market. According to ( Kuwawenaruwa et al.,2020), this will help them know when there
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is likely to be inflation in the market and when there is expected to be deflation. A piece

of knowledge on this will help the investors and their analysts develop better ways of

curbing this.

Conclusion

The Johnson and Johnson company invests in medical devices, pharmaceuticals,

and consumer healthcare. For value investors, Johnson and Johnson is an excellent stock

to make their investments. Since the general financial health and the prospects of growth

of Johnson and Johnson have demonstrated their potential not only to overperform but

also outperform in the market.

Investors are advised to consider having their portfolios to the stocks of

healthcare. This is because the healthcare sector has historically risen over the world's

market in the past years. It has demonstrated adequate performance in the field compared

to the larger market. The healthcare stocks have managed to stoically hold up even during

the volatile terms for the stock market.

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Healthcare stock market reactions to the pandemic

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The most significant shifts in healthcare as seen by experts in the healthcare

economic world.
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References

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Factors Regarding The Recruitment of Community-Based Healthcare Providers.

Fitchett, G., & Grossoehme, D. (2021). Health care chaplaincy as a research-informed

S. M., Mbarki, I., & Saeed, T. (2021). Government responses to COVID-19 and industry

stock returns. Economic Research-Ekonomska Istraživanja, 1-24.

Phuong, N. T. T., Huy, D. T. N., & Van Tuan, P profession. Transforming Chaplaincy:

The George Fitchett Reader, 128.

Bouri, E., Naeem, M. A., Nor. (2020). The evaluation of impacts of a seven-factor model

on nib stock price in the commercial banking industry in Vietnam-and roles of

Disclosure of Accounting Policy In Risk Management. International Journal of

Entrepreneurship, 24, 1-13.

Heidari, H., Refah Kahriz, A., & Mohammadzadeh, Y. (2019). Stock market behavior of

pharmaceutical industry in Iran and macroeconomic factors. Economic Change

and Restructuring, 52(3), 255-277.

Kuupiel, D., Tlou, B., Bawontuo, V., Drain, P. K., & Mashamba-Thompson, T. P. (2019).

Poor supply chain management and stock-outs of point-of-care diagnostic tests in

Upper East Region’s primary healthcare clinics, Ghana. PloS one, 14(2),

e0211498.
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Naseem, S., Mohsin, M., Hui, W., Liyan, G., & Penglai, K. (2021). The investor

psychology and stock market behavior during the initial era of COVID-19: a

study of China, Japan, and the United States. Frontiers in Psychology, 12,

626934.

Iwu, C. J., Ngcobo, N., McCaul, M., Mangqalaza, H., Magwaca, A., Chikte, U., &

Wiysonge, C. S. (2020). Vaccine stock management in primary health care

facilities in OR Tambo District, Eastern Cape, South Africa. Vaccine, 38(25),

4111-4118.

Kuwawenaruwa, A., Wyss, K., Wiedenmayer, K., Metta, E., & Tediosi, F. (2020). The

effects of medicines availability and stock-outs on household’s utilization of

healthcare services in Dodoma region, Tanzania. Health policy and

planning, 35(3), 323-333.

Mishra, P. K., & Mishra, S. K. (2020). Corona pandemic and stock market behavior:

empirical insights from selected Asian countries. Millennial Asia, 11(3), 341-365.