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Investors remain in the midst of one of the greatest bullish moves in history. The S&P 500 has risen in 16 of the past 19 weeks, advancing about 25% over that stretch. It’s a remarkable feat that has only occurred a handful of times in the past. Coming off this historic run, market participants may feel cautious and question if this rally has more legs.

Tech stocks have led the way throughout this new bull market, bolstered by an artificial intelligence theme that caught many investors off guard. As the rally broadened out in recent months, other sectors outside of technology are returning to the forefront as market breadth shows vast signs of improvement.

The health care sector is one of the areas that is showing renewed strength. This pocket of the market is somewhat unique in that it has historically been viewed as a defensive area, but also has many growth aspects and benefits from advances in technology. We’re seeing that play out this year, with many related stocks outperforming the market.

The iShares U.S. Medical Devices ETF IHI registered its largest buying volume in several years during yesterday’s session. The IHI ETF provides exposure to companies that manufacture and distribute medical devices. The fund has broken out to a 52-week high as its constituents benefit from a rally in health care companies.

New highs are a sign of strength; many health care stocks have completed large bases and are climbing into new ground on above-average volume, which serves as another sign that this latest move in the IHI ETF may have more room to run.

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Medical Stocks to Watch

Dexcom DXCM, a developer of glucose monitoring systems, is a stock to keep an eye on in the coming weeks. The Food and Drug Administration recently cleared Dexcom’s newest body-worn device for people who don’t require insulin treatment.

DXCM is a Zacks Rank #2 (Buy) stock. Back in February, Dexcom posted fourth-quarter earnings of $0.50/share, which marked a 16.3% surprise over consensus estimates. The company has delivered a trailing four-quarter average earnings beat of 32.8%.

Full-year earnings for Dexcom are anticipated to climb 15.8% on 19% higher revenues. The stock has skyrocketed over the past five months, climbing nearly 80% and widely outperforming the market.

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Edwards Lifesciences EW is another key stock to watch. The company provides products and technologies to treat late-stage cardiovascular disease. Edwards Lifesciences is the world’s leading manufacturer of tissue replacement heart valves.

A Zacks Rank #2 (Buy), Edwards Lifesciences has met or exceeded earnings estimates in each of the last four quarters. Looking ahead, earnings estimates for 2024 have been on the rise lately. Analysts covering EW have bumped up their EPS estimates by 0.73% in the past 60 days. The full-year Zacks Consensus Estimate is currently $2.76/share, reflecting potential growth of 10% relative to last year.

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Diversified health care company Abbott Laboratories ABT is another big player in the medical device industry. Abbott’s medical devices segment accounted for more than 42% of total revenues last year and includes diabetes care, vision care and its vascular business.

The company has established a healthy track record of surpassing earnings estimates. A Zacks Rank #3 (Hold), earnings for Abbott Laboratories are projected to increase 4.05% in 2024 on 4.47% higher revenues. ABT stock has also outperformed the market recently, surging 34% over the prior 5 months.

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These three companies make up more than 27% of the overall IHI ETF holdings. Make sure to keep an eye on the medical device space as health care stocks return to the forefront.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.