The document analyzes the health care sector and the investment club's current holdings within it. It finds that the health care sector has outperformed the market in recent years and contains industries like pharmaceuticals and biotechnology that show strength and room for growth. However, it notes the club's holdings are not diversified across industries within health care and all three focus on health care services, increasing risk. The club's three current holdings - Aetna, Express Scripts, and UnitedHealth Group - have all provided high annualized returns but operate in different health care service segments.

1. Investment Club
Nick Gearhart
Equity Research Analyst
763.567.0339
Invest@stcloudstate.edu
Sunday, September 13th
2015
Health Care Sector
Overweight: 16.00% of portfolio
Sector Market Capitalization: 4.82 T
*This report is published for educational purposes only by students who are actively managing the Investment Fund at St. Cloud State University
*Sources include: Bloomberg Professional, Fidelity, and Morningstar
Sector Summary: The Health Care Sector has been the
market leader during the past three years with many catalysts
backing proof for a fairly valued sector. Each industry within the
Health Care Sector displays strength and room for growth.
 Pharmaceuticals: This industry, while volatile in
nature, still contains companies that provide a steady and
established return. In our view, if a security within this
industry is considered for the fund it will need to show
proof of numerous drugs covering many areas. Safer and
larger stocks would be considerable options.
 Biotechnology: Similar to our Pharmaceutical
situation, besides the overvaluation of the industry and
outlook for slowing growth pushes us to avoid this industry.
Recommendations: Hold all three current holdings due to
strong confidence in the demand and necessity for healthcare.
Service providers will continue to prosper if the products and
services they are providing fit the needs of consumers in America,
which we believe our three current holdings have the competitive
advantage to do so.
Sector Description: This
sector encompasses two main industry
groups. The first includes companies
who manufacture health care equipment
and supplies or provides health care
services. The second rearranges
companies involved in R&D, production
and marketing of pharmaceuticals and
biotechnology products.
Current holdings: The Club
has not followed diversification
guidelines, where all three of our current
holdings fall within the health care
service provider industry. Failing to
diversify our healthcare sector holdings
into various industries has provided us
with high risk along with high return, so
far.
Firm
% of
Fund
Date
Aetna 4.38% 01.26.15
Express Scripts 1.57% 09.26.11
UnitedHealth
Group
5.30% 01.31.11
Aetna has produced an annualized return
of 20.39%, Express Scripts with a
20.92% annualized return, and finally
Unitedhealth Group has provided the
fund a 24.08% annualized return.
Ticker Market Cap P/E
AET 38.22 B 16.63
ESRX 55.89 B 27.27
UNH 110.69 B 18.47
While all three current holdings are
within the health care service providers,
each entity focuses their efforts in
various segments. Aetna covers health
care benefits, group insurance and large
case pensions. Express Scripts
emphasizes in healthcare management
and administration services.
Unitedhealth Group dives into the
designing of products and services while
applying technologies to improve access
and affordability to healthcare services.
All three companies revenue is generate
domestically here in the U.S.