Betting on Boomers for a Healthy Investment

I happen to like Merck (MRK Quote), Johnson & Johnson (JNJ Quote) and Bristol-Myers (BMY Quote) for their yields and good pricing. What is striking overall is that these stocks have low P/E ratios because the sector has been beaten down in recent years. This may be the time to buy and hold them.

Likewise, keep watch on orthopedic-implant manufacturers like Zimmer Holdings(ZMH Quote), Medtronic(MDT Quote) and Biomet(BMET Quote). These companies have reasonable P/Es, though they have year-to-date and 12-month losses.

I believe that the stocks of manufacturers of diabetes products and orthopedic devices will fare exceptionally well over the long term. But many of these stocks happen to have very high P/E ratios and poor recent performance at this time. Their prices are simply too high relative to earnings. So when it comes to orthopedic stocks, wait until prices improve and the Department of Justice winds up a probe of orthopedic specialists.

Healthy REITs

Health care real estate investment trusts derive rent income from nursing homes, hospitals, medical offices and clinics. They also are a good way of capitalizing on the aging of boomers -- but there are decided risks.

I've found 14 health care-focused REITs, and here are a few that stand out:

The Right REITs
COMPANY	P/E	D/Y	PERFORMANCE
			YTD	12-MONTHS
Health Care Property (HCP)	24.3	6.57	9.1%	5.7%
LTC Properties (LTC)	20.4	6.13	8.4%	6.7%
National HealthCare (NHC)	19.8	1.54	21.0%	34.1%
Senior Housing Properties (SNH)	22.9	7.57	11.0%	(0.2%)
Universal Health (UHT)	16.4	6.94	4.7%	(12.3%)
Ventas (VTR)	27.2	4.50	10.7%	16.4%
Source: Morningstar