The market may be getting off to a slow start in 2019, but healthcare stocks remain strong after posting a solid 2018, ranking first among the 11 primary sectors in Standard and Poor's 500, according to a Reuters review of ratings from Wall Street firms.
Along with utilities, healthcare was the only sector to see positive returns last year, finishing 2018 up 4.7 percent. Across all sectors, the benchmark index fell 6.2 percent.
The reasons for healthcare's strong showing are varied. Strong balance sheets and an upbeat earnings outlook were both factors, due in party to the industry's ability to weather economic cycles more gracefully than other business types.
Those economic cycles are part of the reason investors are more comfortable with healthcare than other sectors, found Reuters. Because it's less susceptible to such cycles, a slowing economy wouldn't affect it as much.
Another point in healthcare's favor is that revenue streams tend to be diverse, driven largely by the inherent diversity of the industry, which can range from hospitals and prescription medicine manufacturers to insurers and medical device makers.
Overall, healthcare companies in the S&P 500 are projected to increase earnings by 7.5 percent in 2019, pacing ahead of the 6.3 percent growth projected for all sectors combined.
Whether healthcare can maintain its strong performance remains to be seen. The industry struggled in the time before the 2016 election, stoked by concerns about the high cost of prescription medications -- an issue that still lingers.
Another factor that could impact healthcare's performance would be investor optimism about economic growth. If optimism increases, investors could flee so-called "defensive" stocks for ones that carry more risk.