Can Regis Healthcare Ltd, Sirtex Medical Limited and Healthscope Ltd rally higher while the S&P/ASX 200 falls?

The S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) ended Thursday’s trading session down 1%, which continues a significant downward trend that has seen the index lose over 130 points so far this week.

While many big name blue-chip stocks are crashing lower and hitting new 52-week lows there is a small band of stocks which are bucking the trend as investors seek out safe, defensive investments to protect them in this increasingly volatile market.

One sector which appears to be finding support is health care and while it’s not universal with specific health stocks having their issues, it is interesting to note the performance of Regis Healthcare Ltd (ASX: REG), Sirtex Medical Limited (ASX: SRX) and Healthscope Ltd (ASX: HSO) on Thursday.

For the day, the above three stocks gained 1.5%, 0.9% and 0.8% respectively, which was a significant outperformance compared with the index.

The strong showing of these stocks suggests that investors may view them as ‘safe havens’. While investors shouldn’t lose sight of the requirement of not overpaying for a stock, it is reasonable to suggest that a premium for enduring earnings power is warranted given the defensive revenue streams these companies possess.

Regis is a leading provider of residential aged care facilities and retirement villages; Sirtex manufactures and distributes an innovative cancer therapy; while Healthscope is a large private hospital operator. Obviously all three companies provide essential services whose demand will continue to increase with an aging, wealthier population.

These defensive qualities are reasonably certain and reasonably stable which makes them enticing businesses to own especially if your view is that the economy and market may struggle to make further gains in the coming year. For this reason alone, it wouldn’t be surprising to see ‘high certainty’ defensive, growth stocks such as these health care businesses emerge as a sought after sector for investors if this volatility continues.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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