With all the stock market volatility at the end of 2018, many investors have been scratching their heads and wondering how they want their assets and portfolios to be positioned into what looks and feels like a volatile 2019. Some investors are even wondering if they should stay in stocks at all.

Other investors are taking the opposite view and are using the market’s big sell-off as an opportunity to look for companies that are still offering growth and upside in 2019 and beyond.

If the stock market gets too volatile, even the most defensive sectors can get hurt. But health care has been one of the sectors that has weathered many storms over time. If you get sick, you have to get medical treatment, and the state of the economy might not matter. This is what draws so many investors into health care stocks.

Canaccord Genuity health care analyst Mark Massaro has identified his top health care stock picks for 2019. Investors should take note that some of these are more speculative than you might expect with Big Pharma, traditional medical device makers, hospitals and care centers. Still, these are his top picks, with Buy ratings and big upside price targets for 2019. We have included the consensus data from Thomson Reuters to show how these price targets stack up against peer coverage.

While upside of 30%, 50% and even 100% may attract many investors, please do not ignore the warnings about analyst calls during bear markets and periods of volatility.

As far as the driver for additional upside here, Canaccord Genuity is expecting more IPOs in 2019, an uptick in acquisitions and help from share buybacks. Investors hunting for disruptive growth companies at the intersection of health care and technology can and should focus on diagnostics and “precision medicine.”

The following have been listed in alphabetical order, rather than by any ranking or priority of one company over another.

Exact Sciences

Exact Sciences Corp. (NASDAQ: EXAS) may be exactly what speculative investors want, if its name proves to further model its opportunity. With a Buy rating and an $87 price target, Canaccord Genuity is expecting upside here of 40% from its $62 share price. The company is considered a dominant industry leader that has just started teaming up with Pfizer to bring its innovative Cologuard test to help curb the number of colon cancer deaths. Its market is believed to have less than 4% penetration by the noninvasive colon cancer test maker that uses liquid biopsies rather than colonoscopies.

The stock’s 52-week trading range is $37.36 to $82.85, and its consensus target price is $88.00. Investors should keep in mind that short sellers have been rather vocal about the test risks around this company’s Cologuard.

Heska

Heska Corp. (NASDAQ: HSKA) has a top franchise when it comes to veterinary diagnostic products for canine and feline health care markets. Canaccord Genuity sees it being loaded up with catalysts for 2019, and the firm even thinks Heska would be a formidable takeover target for companies like Mars or Covetrus.

The firm’s price target of $123 implies upside of 40% from the $88 share price. The consensus target price is $119.17, and the 52-week trading range is $56.59 to $114.50. Investors might take note that the $685 million market cap means it is a micro-cap stock. Another issue to consider is that the valuation is 80 times trailing earnings and is about 45 times expected 2019 earnings.

Illumina

Illumina Inc. (NASDAQ: ILMN) has a $375 price target, which implies upside of more than 30% from its $285 share price. With a $44 billion market cap, Illumina is considered to be a dominant leader with high visibility for double-digit earnings and revenue growth. Massaro noted that Illumina also may have penetrated about 1% of the developed-world total addressable market value of $60 billion or more.

Illumina has a 52-week trading range of $207.51 to $372.61 and a consensus target price of $361.56.

Natera

Natera Inc. (NASDAQ: NTRA) is considered to be a leader in testing, and Canaccord Genuity’s $25 price target implies upside of about 100% from the prior $12.10 closing price. The firm’s call notes that Natera will launch its Signatera liquid biopsy tests to cancer patients in 2019, targeting patients for lung, breast and colon cancers. An added bonus is that it expects an ACOG endorsement, with coverage from UnitedHealth and Aetna. Another boost here is a $20 billion or more total addressable market, while it has a mere $765 million market cap.

Natera has a consensus target price of $25.50 already, and its shares have traded between $8.60 and $29.62 in the past 52-weeks.

OraSure Technologies

OraSure Technologies Inc. (NASDAQ: OSUR) has a price target of $18, which represents more than 50% upside from the $11.60 share price. Canaccord Genuity is modeling double-digit top and bottom line growth from the DNA Genotek, HIV self-test and microbiome products. The firm also pointed out that OraSure trades at only 2.7 times its expected 2019 revenues and that the shares were down almost 50% from their peak in 2018.

OraSure has a market cap of $715 million and a 52-week trading range of $10.27 to $22.22. Its consensus target price is $16.25.

Quidel

Quidel Corp. (NASDAQ: QDEL) is considered to be the largest medical point-of-care diagnostics pure-play, and Canaccord Genuity’s price target of $70 implies upside of more than 45%, if the call proves to be right. Quidel is said to have executed well and has multiple opportunities for growth from its packed R&D pipeline. While an unexpected initial legal ruling prompted a major pullback in the shares, Massaro sees that loss reversing course as the dust settles in 2019.

Quidel has a consensus analyst target of $66.50 and a 52-week trading range of $41.50 to $77.63. With shares at $49 after the call, its market cap is almost $2 billion.

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Canaccord Genuity’s top health picks for 2018 generated a return of 10%, compared −6% for the S&P 500. The firm’s new outlook report further noted its views for the market in general:

2018 was a wild ride that featured high-highs and anxiety-producing lows. We believe Wall Street has overreacted to Fed Chairman Powell’s policy normalization, and we think the Apple (Q4) miss helps prove that “trade wars” benefit nobody, and we think a China trade deal gets done. We think +2% US GDP growth, low unemployment, and still historically low interest rates are not a bad backdrop for U.S. equities.

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