Health Care, Cyber Security Stocks Seen Marching Higher

NEW YORK (TheStreet) - U.S. stocks are flat on Thursday, but health care stocks are shooting higher after the U.S. Supreme Court upheld tax subsidies for the Affordable Care Act

In particular, this has sent hospital stocks soaring higher, a group that Stephen Weiss, founder and managing partner of Short Hills Capital Partners LLC, called attractively-priced on CNBC's "Fast Money Halftime Report." Hospitals are the single biggest beneficiary of the Affordable Care Act, he said. 

"Almost everything in this sector is just absolutely on fire -- all these stocks continue to work," said Josh Brown, CEO and co-founder of Ritholtz Wealth Management. Investors should stick with health care, as biotech, pharmaceutical and hospital stocks all continue to move higher. 

It's also hard to sell out of cyber security stocks, since each new hacking announcement leads to a rally for the group, Brown said. If investors have yet to long though, they should wait for a pullback. 

FireEye (FEYE) and Palo Alto Networks (PANW) are the two best stocks in the industry, Weiss added. 

According to Steve Koenig, an analyst at Wedbush Securities, FireEye still has "plenty of upside." He initiated the stock Wednesday with an outperform rating and $63 price target, saying the company is a leader in its industry and is "extremely well-positioned" as the number and severity of hacks continues to grow. He's also bullish on Proofpoint (PFPT).

Taking a step back, Brown assessed the broader market. He said it's "healthy" when investors remain somewhat skeptical of market gains.

On Thursday, Netflix (NFLX) stock received a pair of downgrades, but Brown said it's better to see analysts acting more rationally by downgrading the stock, than irrationally by upgrading a stock that has rallied 100% this year. 

Jim Lebenthal, president of Lebenthal Asset Management, agreed, adding that while a correction could hit stocks at any point, a large pullback - say, of 30% - is unlikely to occur. Simply put, the financial pieces necessary for a huge pullback simply don't exist right now. 

With transport stocks down 10% from the November highs, Lebenthal said now is the time to look for stocks to buy, not sell. Specifically, he likes railroad stocks like Norfolk Southern (NSC). Weiss added that he likes airlines stocks.

However, investors shouldn't worry too much about a huge correction, Weiss said broadly of stocks. The average investor is not very good at timing the market, and more often than not, stocks tend to rise over the long-term. However, it's never a bad idea to keep some cash on hand to buy on a pullback, he said.

On Wednesday, Carl Icahn spoke cautiously on the market, but said the high yield bond market eventually going down is a "no brainer," as investors are taking on too much risk for too little reward.

But not all investors agree. Elaine Stokes, vice president and fund manager at Loomis, Sayles & Company, says it's not 2009 again. While investors might get a better buying opportunity in the high yield market later this year, it's not necessarily a bad investment - particularly for those willing to research the individual companies. Investors should find the high yield bonds they want, hold steady during periods of volatility, and buy on dips, she said.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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