A gold rush is heating up in this massive industry

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Today’s issue in preview:

• A gold rush is heating up in this massive industry

• If you’re bearish on America after seeing this chart, get your head checked

• The biggest bull market you probably aren’t making money on

• Learn our Top Themes to buy now

A gold rush is heating up in this massive industry

Credit: Liudmila Chernetska

Mid-term elections. The Iran War. The status of the AI trade.

Over the past week, investors have fixated on these stories and their potential effects on markets…

…which means not nearly enough attention is being paid to the “Boomer healthcare” megatrend and how it is rewarding investors and dominating the market leaderboard.

On Friday, many stocks inside the healthcare sector’s Major Drugmaker industry group surged to new all-time highs. This elite group includes:

Eli Lilly (LLY), a $1.33 trillion pharmaceutical giant leading the booming obesity and diabetes treatment markets with blockbuster drugs Mounjaro and Zepbound.

AbbVie (ABBV), a $520 billion pharmaceutical giant specializing in immunology, oncology, neuroscience, and aesthetics, with blockbuster drugs Skyrizi and Rinvoq.

Amgen (AMGN), a $252 billion biotechnology giant developing treatments for cancer, inflammatory diseases, osteoporosis, and other serious medical conditions.

Gilead Sciences (GILD), a $211 billion biotechnology leader specializing in HIV treatments, antiviral medicines, and a growing portfolio of cancer therapies.

Regeneron Pharmaceuticals (REGN), a $96 billion biotechnology firm developing antibody-based medicines for eye diseases, allergic conditions, cancer, and inflammatory disorders.

United Therapeutics (UTHR), a $25.7 billion biotechnology company specializing in pulmonary hypertension treatments and developing technologies for organ transplantation.

Exelixis (EXEL), a $16.9 billion biotechnology company specializing in cancer treatments, best known for its blockbuster drug Cabometyx.

In addition to these individual firms, the world’s largest healthcare stock ETF – the Health Care Select Sector SPDR Fund (XLV) – reached a new all-time high. The iShares Nasdaq Biotechnology ETF (IBB) and the iShares U.S. Pharmaceuticals ETF (IHE) also powered to new all-time highs.

For more than three years, I’ve made “Boomer healthcare” one of my highest conviction long-term investment themes. We don’t know of another investment research publication that has written more bullishly, more often about this booming industry than we have.

Over the past year, we have published more than two dozen pieces on opportunities in drug development, biotechnology, senior living facilities, genomics, cardiology, diagnostics, and more.

Our bullish stance has produced a parade of home runs, with the healthcare industry dominating the stock market’s list of new highs over the past year.

Healthcare stocks are generating extraordinary returns because they are benefiting from several megatrends simultaneously. One is the enormous Baby Boom generation entering the phase of life when healthcare spending skyrockets.

And two: extraordinary innovation in the healthcare sector. Thanks to advances in genomic sequencing, AI-powered analytics, imaging technology, and preventive treatments, healthcare is becoming much better and more personalized. This is driving strong demand for all kinds of new tests, tools, and treatments.

After all, when a useful and important service you buy gets much better, you typically buy more of it.

I am fully aware that I may lose readers when I check in on the “juggernaut-like” healthcare bull market. People don’t find it nearly as interesting as Elon Musk’s latest venture or the latest AI semiconductor chip.

I’ve devoted so much attention to healthcare because it has paid off like a broken slot machine for us. It is like a pinata we keep hitting every week that yields rewards every week. The healthcare gold rush is a trend that is paying us.

It’s like the stock market version of what the famed bank robber Willie Sutton said. When asked why he robbed banks, Sutton said, “Because that’s where the money is.”

Given the very large and long-term nature of the Boomer healthcare megatrend, we expect the solid returns to continue.

If you’re bearish on America after seeing this chart, get your head checked

Credit: alvarez

Oh boy…

The bears are going to have a tough time processing today’s news from hotel giant Marriott International (MAR).

This morning, Marriott reported its third quarter business results. Revenue per available room (RevPAR) increased 6.5% worldwide and 7.4% in the U.S. and Canada. Adjusted earnings per share climbed 22% year over year, beating Wall Street estimates, while total revenue rose 8% to $7.01 billion.

Marriott also raised its full-year RevPAR growth forecast to 4.5%–5%, signaling confidence in continued hotel demand.

Marriott’s strong results suggest that consumers and businesses continue spending heavily on travel and lodging.

Thanks to these exceptional results and the prospect of more of them in the future, Marriott stock surged 5.3% this morning to reach a new all-time high. Fellow hotel giant Hilton Worldwide (HLT) also reached a new all-time high.

Together, these new all-time highs flash a bullish signal for the U.S. economy. They say the economy is doing much better than most people give it credit for.

Hotel operators such as Hilton and Marriott are highly economically sensitive.

These are the companies you spend money with when you go on vacation, when you take a trip to the city to visit family, and when you attend a conference for work. And those kinds of trips often coincide with money spent on restaurants, on shows, and on shopping.

These firms thrive when consumers have enough money to travel and when businesses are spending freely on conferences, deal-making, and events. They struggle when the opposite is the case.

Right now, these firms are not struggling. They are booming. And they don’t boom when the economy is weak.

You can read a thousand differing opinions and forecasts related to the AI trade, interest rates, or the economy. However, there’s only one source of objective truth: Market prices.

Market prices are the sum total and final expression of all knowledge held by industry insiders, connected money managers, government officials, and bankers who quietly control huge swaths of the economy. These people know much more about their industries of focus than you or I do.

Their knowledge manifests itself through buying and selling activity that sets market prices. Market prices are not always perfect, but much of the time, they know a hell of a lot more than any economist or investment guru.

If you ever get brain overload from listening to many different “experts” espousing conflicting opinions about a war, a technology, or the health of the economy, you can easily tune them out and focus on signals that contain more distilled insider knowledge in them than all those experts combined: Market prices.

Over the past week, we have highlighted the strong business performance and rising stock prices of credit card giant Visa (V), fellow giant Mastercard (MA), premium home furnishing retailer Williams-Sonoma (WSM), electronics retailer Best Buy (BBY), and U.S. hotel/resort operators.

The strong business performance and rising stock prices of these firms tell a powerful story…

Sure, the global economy has risks, problems, and imbalances. It always does. But it also has some enormous positives working in favor of economic growth, business growth, and rising asset prices.

Right now, those enormous positives are overwhelming the negatives. The trends of consumer spending and overall American economic health are unmistakably UP.

The biggest bull market you probably aren’t making money on

Credit: levkr

The Made in America megatrend is starting the week strong.

This morning, a handful of key players in this trend reached new one-year highs. These market leaders include:

Reliance Inc. (RS) – a $22.9 billion metals service center distributing and processing steel, aluminum, and other industrial metals for manufacturers, construction companies, and aerospace customers. We profiled this market leader here last week.

Ryerson Holding (RYZ) – a $1.7 billion metals distributor and processor supplying steel, aluminum, and stainless-steel products to manufacturers across a wide range of industries.

Ecolab (ECL) – an $86.4 billion industrial services company providing water treatment, cleaning, sanitation, and process optimization solutions to factories, hospitals, hotels, and food producers.

Allegion (ALLE) – a $16.1 billion security products manufacturer specializing in commercial building locks, electronic access controls, door hardware, and security systems for institutional customers.

Exponent, Inc. (EXPO) – a $4.0 billion engineering and scientific consulting firm specializing in product safety, failure analysis, and complex industrial engineering challenges.

Tetra Tech (TTEK) – a $10.1 billion engineering and consulting firm specializing in water infrastructure, environmental remediation, government projects, and complex industrial and infrastructure development.

DMC Global (BOOM) – a $199 million industrial manufacturer producing specialized metal products, including explosion-welded metals for industrial equipment and components for energy and construction markets.

Each of these firms is positioned to benefit from a multi-year boom in U.S. manufacturing capacity expansion… which we call the Made in America megatrend.

Back in January, I made the case for investing in companies that supply critical equipment and services for building and operating today’s high-tech factories.

The bull case here is simple…

President Donald Trump – along with many business and military leaders – believes that the U.S. has outsourced far too much of its industrial capacity to China over the past 25 years. We outsourced significant portions of our semiconductor, appliance, medicine, weapons, and machinery production.

We outsourced the capacity to produce and process critical resources, such as rare earth elements.

The COVID-19 pandemic showed that depending on other countries for critical economic inputs makes the U.S. economy less safe and secure. To put it bluntly, it is very stupid not to produce products critical to national security, like AI semiconductors, within our own borders… especially when we are in an economic and geopolitical “great powers” contest with China.

Trump has staked his legacy and reputation on greatly expanding our industrial base… and he’s working with business leaders to invest trillions to pursue this goal.

Collectively, major American companies such as Apple (AAPL), Nvidia (NVDA), Micron (MU), IBM (IBM), and Eli Lilly (LLY) have announced more than $1.5 trillion in planned U.S. investments spanning advanced manufacturing, new factories, research facilities, and domestic supply chains.

In Money & Megatrends, we’ve capitalized on this “Made in America” megatrend with strong returns in robotics, factory automation, and machine component makers such as Cognex (CGNX), Ouster (OUST), and RBC Bearings (RBC).

The Made in America megatrend involves building huge amounts of new AI data centers, high-tech factories, and electrical infrastructure. The rising share prices of the key players detailed above indicate this trend is in full swing. It has much further to run.

Market Notes

• Payment giants Mastercard (MA) and Visa (V) reached new all-time highs today. This is more evidence of a bullish economy.

• Signs the housing market may be getting “less terrible”: Flooring giant Mohawk (MHK) jumped 6% this morning to reach a new one-year high. Outdoor decking giant Trex (TREX) reached a new one-year high.

• Motorcycle giant Harley-Davidson (HOG) reached a new one-year high today.

• Our recommendation to get long the biotech sector continues to pay off. Biotech plays Vertex Pharmaceuticals (VRTX), Regeneron (REGN), and TG Therapeutics (TGTX) reached new all-time highs today.

• Insurance brokers Marsh McLennan Companie Inc. (MRSH) and Arthur J. Gallagher (AJG) reached new one-year highs today, along with reinsurer Everest Group (EG).

• Neoclouds Iren (IREN), Cleanspark (CLSK), and Cipher Digital (CIFR) all hit new one-year lows today amidst AI financing fears.

Regards,

Brian Hunt
Editor, Money & Megatrends

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