And for example, new immunology drugs including Baricitnib and Taltz may eventually reach multi-billion dollar annual sales (Lilly’s sales were $5.2 billion in the most recent third quarter).Also attractive, Lilly has a big 2.8% dividend yield, with a healthy 87.5% payout ratio, and an attractive PEG ratio of 2.1x. Further, Lilly’s shares have been dragged lower this year as the overall sector has come down due to regulatory uncertainty and because healthcare (and biotechnology and pharmaceuticals, in particular) performed very well in the prior year (2015). Given Lilly’s diversified, growing, product line and valuation, we consider it more attractive than Gilead.

Bristol-Myers Squibb Co (NYSE:BMY)

Despite its post-election pop, Bristol-Myers Squibb Co (NYSE:BMY)’s shares are still down for the year, and they’re still trading at an attractive valuation. For example, the company’s 5-year EPS growth estimate is an impressive 18.0%, and its forward PEG ratio is only 1.1x. The company is getting through several patent losses over the next couple years, but its cancer drug, Opdivo, is expanding into new markets and has significant growth potential. Worth noting, during its recent third quarter earnings release,

“the company raised full-year guidance for 2016 and provided guidance expectations for 2017, announced a new $3 billion share repurchase authorization, and announced an evolution of the company’s operating model to focus resources behind the company’s highest priorities, accelerate its pipeline and simplify infrastructure.”

Also worth noting, Bristol-Myers Squibb Co (NYSE:BMY) has a healthy 2.7% dividend yield (the payout ratio is only 75.3% and earnings are expected to grow significantly). We consider Bristol-Meyers Squibb more attractive than Gilead for contrarian, dividend-focused, value investors.

Conclusion:

Health Care stocks (and drug companies, in particular) have performed very poorly this year as uncertainty in the sector has remained high. We believe this uncertainty and under-performance have created attractive opportunities for contrarian value-focused investors, such as the three opportunities described in this article. For additional contrarian opportunities, consider this week’s members-only investment idea (it’s a small cap software company), as well as our more comprehensive ranking of opportunities within the healthcare sector and across industry groups.

Note: This article was written by Blue Harbinger. At Blue Harbinger, our mission is to help you identify exceptional investment opportunities while avoiding the high costs and conflicts of interest that are prevalent throughout the industry. We offer additional free reports and a premium subscription service at BlueHarbinger.com. If you are ever in the Naperville, IL, USA area, our founder (Mark D. Hines) is happy to meet you at a local coffeehouse to talk about investments. Please feel free to get in touch.