Health care stocks have been beaten up, but Smead Capital Management considers investors are missing a buying chance, CEO Bill Smead said on the day of Monday.
Amid what is been a tough year for the sector, S&P 500 health care stocks are down approximately 7% year to date, lagging behind all other sectors. Smead, however, stated that he is still a believer.
"We are large cap value people. We need to buy meritorious, wonderful companies when everybody else hates them, and I surely say they hate health care right now," Smead told CNBC's "Squawk on the Street."
Among Smead's picks are Merck, Pfizer, and Amgen, companies that he claimed boast price-to-earnings ratios well below broader market measures, "fantastic" dividends, and free cash flow.
Election year uncertainty is merely 1 factor weighing on the space.
Democratic presidential primary front runner Hillary Clinton has said she would tackle "price gouging" by drug makers if she takes the White House. Both she and Donald Trump, who leads in the GOP contest, support offering the government the right to negotiate drug Medicare drug costs.
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