The recent volatility from the Healthcare sector has left many investors weary about where to place their money. General market swings aside, M&A activity and legislative developments have intensified the uncertainty in the sector, but have also lead to many investment opportunities.

M&A has been very exciting and has ramped up heavily in the last few months.  Pfizer(PFE) and Wyeth, Roche and Genentech (DNA), Merck (MRK) and Schering-Plough, Gilead (GILD) and CV Therapeutics have all hit the headlines.  Obama’s Healthcare Budget Plan has stirred up heavy trading in recent weeks, putting downward pressure on the Managed Care and Pharmaceuticals sectors, while giving a boost to the Generic Drugmakers. The market has rallied in the past week.  Is your portfolio ready for a turn-around? Is small-cap going to outperform on the way up, or large cap? Growth? Value? Well, let me give you a couple of picks within the Healthcare sector that I feel can handle the tension of the market, while also providing unmatched returns.

On a macroeconomic basis, looking at Obama’s Healthcare Budget Plan and worldwide trends, Generics are obviously at the forefront. Should you buy Novartis because it has the Sandoz division so you can sweep away the beaten down “Pharma” stock?  Could you run away with these Generic profits, basically killing two birds with one stone? (NVS) really hasn’t fared that badly in this market compared to some of its competitors like Merck and Pfizer during the last year or so, but I feel your money is better spent elsewhere.

Teva Pharmaceutical, which I wrote about last week, is a clear winner. Teva (TEVA) has an unmatched reach in the global generics market relative to competitors Mylan and Watson.