HCA Healthcare (HCA US) $US386.05

HCA has been good to us over the years, presenting several separate opportunities to buy it on a depressed valuation before experiencing a re-rate higher, and we’ve locked in good gains. Our most recent buy was in January when the stock was trading below a PE of 12x, with the stock now trading on 14.6x, pushing the position up 25%. This is the largest for-profit hospital operator in the U.S. making it a stable business, consistently growing earnings in the mid-single digits. The re-rate higher has not been earnings driven; it’s all multiple expansion as defensive stocks have captured more $’s into recent uncertainty.

HCA has been one of our more active positions, and we intend to maintain that stance. Our overarching view on equities relevant to HCA is that the tariff shock is now done, and the large disparity in performance between stocks offering certainty and stability (which have been bid up) relative to those that have less certainty but more potential growth, will mean revert, presenting opportunities in more cyclical areas as the recovery continues to build steam.

• While HCA is not yet stretched from a valuation perspective, it is heading that way, turning us neutral on the position at this point.