President Donald Trump takes credit for many things, but he can unmistakably be credited for the market’s sudden rise to record highs since his victory in the Electoral College. While the S&P 500 has gained 5.6% since Nov. 8, not all companies have benefited from the so-called “Trump bump,” particularly in sectors cowering from negative projections of his stated opinions and policies.
Health care, hanging in limbo with the potential repeal of Obamacare looming, is the only S&P 500 sector to decline in the past year. It’s down 2.35%, though its constituents still carry a relatively high P/E of 32.02, compared to 26.1 for the index. A closer look shows that the two health care industries to fall the most over the past year also had the highest valuations. Health Care Technology, down 20.3%, had a P/E of 118.6 last year; Biotechnology, docked 11.2%, had a P/E of 46.
Investors seeking cheaper stocks can look beyond the health care sector, though. Three of the five large-cap stocks with the steepest price declines in the past month hail from different sectors. The stocks are: Las Vegas Sands Corp. (LVS, Financial), Humana Inc. (HUM, Financial), Aetna Inc. (AET, Financial), Northrop Grumman Corp. (NOC, Financial) and HDFC Bank Ltd. (HDB, Financial).
Leading the bunch is Las Vegas Sands Corp., owner of resorts and casinos in Macao, Singapore and the U.S. The stock shed 9.9% in a month, from $61.13 to $55.08, including a steep drop on Election Day. The fall didn’t relate to the election, however, but an erroneous report that Macau had halved its ATM limits to 5,000 patacas ($626) in an effort to curb capital outflows from China. In fact, the limit per transaction had been reduced but the daily limit remained unchanged, the Monetary Authority of Macau said in a statement.
Las Vegas Sands has five-year annual growth rates of 12.7% for revenue and 17.1% for EBITDA, with a 5.4% decline rate in book value. Its P/E ratio is 26.8. Several guru investors own the stock, the largest of which are T. Rowe Price Equity Income Fund, Frank Sands (Trades, Portfolio) and Murray Stahl (Trades, Portfolio).
Humana Inc. (HUM, Financial) is a health care company providing insurance and health and wellness services. The company also markets Medicare benefits and has contracts with Medicare and Medicaid services. The government-provided health services have come under pressure as House Republicans pushed on Monday to cut back their funding.
Humana has five-year annual growth rates of 12.5% for revenue, 8.7% for EBITDA and 10.6% for book value. The company has a P/E ratio of 27.6. Larry Robbins (Trades, Portfolio) has the largest holding of Humana, with 6.39% of shares, followed by Daniel Loeb (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio). Fourth-quarter portfolio information that would include their trading activity since the election has not been reported yet.
Aetna Inc. (AET, Financial) offers health care benefits that also include ties to Medicaid and Medicare. Its stock remains higher than its level since the election but fell 3.82% in the past month, from $129.46 to $124.51 per share.
Aetna has five-year annual growth rates of 17.9% in revenue, 12% in EBITDA, and 12.7% in book value. It also has a P/E of 18. Among guru investors Larry Robbins (Trades, Portfolio), Vanguard Health Care Fund (Trades, Portfolio) and Jock Buckingham have the largest stakes.
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