“The S&P 1500 health care equipment & supplies industry trades at 20.5 times 2015 earnings, a slight P/E premium to the broader index’s 18.2 times. However, with 8.8% earnings growth in 2014 and a projected 14% in 2015 according to Capital IQ, the industry is growing much faster than S&P 1500’s 4.9% and 5.8%, respectively,” according to the research firm.
Two of PSCH’s 71 holdings – Haemonics (NYSE: HAE) and Masimo (NasdaqGS: MASI) – are considered undervalued by S&P Capital. Those stocks combine for over 4% of PSCH’s weight. PSCH also merits consideration as a strong seasonal play.
Since 1995, healthcare members of the S&P SmallCap 600 have posted solid gains in the parts of the year that are traditionally weak for the broader market. S&P Capital IQ has a market weight rating on PSCH. [Buy These Small-Cap ETFs in May]
PowerShares S&P SmallCap Health Care Portfolio