Kully Sumra, branch director at Charles Schwab UK, offers his views on the US healthcare and industrial sectors.

The health care sector continues to hold our lone outperform rating, as it is once again back in the headlines. The Obama administration has renewed its commitment to passing a major health care package, putting its full weight behind the push to get something done soon. 



We urge investors to move past the noise that sometimes clouds the market's very near-term movement. Certainly, we're watching developments in Washington very carefully, but we also believe that much of the consternation surrounding the health care group has already been reflected in the stock prices. 



Looking past the political hubbub, we see a sector with very solid balance sheets that can support increased dividends, research, and merger-and-acquisition activity.

We also see valuations that are quite attractive based on historical levels, while from a technical perspective the concerns surrounding the group have driven investor sentiment indicators to oversold levels.
 


We continue to believe that the health care sector will outperform over the next three to six months, and we regard the recent weakness as more of a buying opportunity than the start of a downtrend. 



Turning to the consumer discretionary sector, we hold the opposite view and have therefore have given it an underperform rating. Although consumer discretionary has performed relatively well of late, we continue to believe that this is a short-term phenomenon and underperformance is around the corner. Consumer confidence remains low, housing problems continue, and unemployment remains relatively high—all indicating to us that consumer spending may disappoint in the coming months. 


With regards to our other sector views we continue to hold a market perform rating on consumer staples, energy, financials, industrials, information technology, materials, telecom and utilities.  These opinions are tactical in nature and can change quickly according to conditions in the market. 


The Charles Schwab sector views reflect a three- to six-month outlook, and are appropriate for investors looking for tactical ideas when considering the US market as an investment opportunity.