The stock market has a way of proving the masses wrong.

After all the chatter about the new administration’s potentially adverse impact on pharmaceutical stocks and related industries, the broader health care sector is leading the charge in 2025.

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Following the latest market volatility, the S&P 500 is now in negative territory on the year. It’s somewhat surprising to peak behind the curtain and see that 9 of 11 S&P sectors remain green.

The price action in the stock market has been fast and furious as investors repositioned their portfolios for the new year. Sector rotation has been on full display, with institutions foregoing growth and technology positions and shifting to more defensive areas like staples, health care and utilities.

We want to be in leading stocks. The problem for many investors is that they fail to notice the relevant signs and distinctions from the leaders. They are too busy holding on to former losers hoping to break even, and refuse to recognize the signals that leading stocks are demonstrating under the surface.

The best investors know what to look for in terms of price patterns, sector rotation, and relative strength. These investors rely on a system that enables them to identify leading stocks at any given point in time, maintaining maximum flexibility and adjusting their gameplan as necessary.

Putting the Zacks Rank System to Work in 2025

Here at Zacks, we give you the tools to help identify winning stocks and outperform the market. Our Zacks Industry Rank identifies the top industry groups that contain market leaders, providing a tailwind to your investing success. Our Zacks Rank methodology pinpoints stocks that are witnessing positive earnings estimate revision activity, allowing investors to jump on board before an emerging rally gets underway. And our Earnings ESP filter empowers investors by allowing them the opportunity to detect stocks that are most likely to beat consensus estimates.

These are just a select few of the benefits available to Zacks’ subscribers. Our Style Scores and Premium Screeners also assist investors in narrowing down the investable universe to only the top names. That’s the key – we only want to include the best of the best in our portfolio, which will allow us to maximize our investing potential.

In the current market environment, stocks within the Zacks Medical – Biomedical and Genetics industry are displaying relative strength through the first two months of this year. This industry group currently ranks in the top 29% out of approximately 250 Zacks Ranked Industries. Because this group is ranked in the top half of all Zacks Ranked Industries, we expect it to outperform the market over the next 3 to 6 months, just as it has so far this year:

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Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.

One leading stock within this industry is Gilead Sciences GILD. A global biopharmaceutical company, Gilead strives to transform and simplify care for people with life-threatening illnesses, including treatments for HIV/AIDS, liver disease, cancer, inflammatory and respiratory diseases, and cardiovascular conditions.

Gilead’s diversified product pipeline bodes well for long-term growth. The company’s Lenacapavir solution for HIV prevention is expected to receive FDA approval later this year, which could drive further upside for GILD shares.

A Zacks Rank #2 (Buy), Gilead Sciences has exceeded the earnings mark in each of the last four quarters, averaging a positive EPS surprise of 19.5% during that stretch. The stock is up over 65% during the past year and has been making a series of new 52-week highs:

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Final Thoughts

The Zacks Medical sector is showing signs of outperformance in 2025 and contains several leading stocks. We can drill down further into industries and individual stocks that are highly ranked and outperforming the market.

During this time of heightened market volatility, it pays to be invested in the right places. Be sure to take advantage of all that Zacks has to offer to uncover winning stocks like GILD.

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Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research