Rising interest rates and a market swoon are making investors wonder whether a recession may be right around the corner. As a result, it might make sense to look at healthcare companies for a place to invest, since they toil in a sector that could very well be more recession-resistant than most others.

Given that reality, we asked three of our contributors to select healthcare stocks worthy of consideration given the current state of the market. They found potential opportunities hiding in plain sight among large-cap healthcare companies Illumnina (NASDAQ:ILMN), Gilead Sciences (NASDAQ:GILD), and Johnson & Johnson (NYSE:JNJ).

Woman pointing at an illustration of a DNA strand

Image source: Getty Images.

This gene-sequencing giant is just getting started

Keith Speights (Illumina): The ability to sequence genes has, without even the slightest bit of exaggeration, changed the world. It's also no exaggeration that Illumina has been the most important company in bringing gene-sequencing to scientists around the world.

Illumina's technology helped slash the cost of sequencing a human genome, the complete set of genes, from over $100 million to around $1,000. In the process, Illumina has become an enormously successful company, with a market cap of over $45 billion. But Illumina CEO Francis deSouza said at the J.P. Morgan Healthcare Conference a few weeks ago that Illumina is "at the very beginning." Again, that's no exaggeration.

A few countries are undertaking efforts to sequence the genomes of hundreds of thousands of their residents, but there's a long way to go. Drugmakers are using gene sequencing to help identify targets for new therapies and screen patients, but less than 1% of the variants in the human genome have been fully characterized. The use of gene sequencing in non-invasive pregnancy testing, rare and undiagnosed diseases, and consumer genomics is still in its early stages.

It's possible that Illumina could face a disruptive threat in the future. Tiny privately held rival Oxford Nanopore, for example, has developed sequencing systems that are a lot smaller than Illumina's and less expensive. For now, though, accuracy is the big problem for Oxford Nanopore's systems. That leaves Illumina in the driver's seat in an industry that has a long and likely profitable road ahead.

Check out the latest Illumina earnings call transcript.

A chance to get back on track

Todd Campbell (Gilead Sciences): Falling prices and stiff competition have taken a toll on Gilead Sciences' hepatitis C drug sales and, thus, its stock price. But there's growing evidence that now could be a good time to bet on this company's recovery.

The company's board has hired a new CEO, Daniel O'Day, who was formerly CEO of Roche Holdings (OTC:RHHBY), one of the world's biggest healthcare companies.

A stabilization of Gilead's hepatitis C sales this year could finally allow the company to start growing again, too. It remains a leader in HIV treatment, but HIV sales growth has so far been more than offset by the slumping hepatitis C revenue. Management thinks hep-C headwinds should ease this year, allowing HIV product strength to take center stage.

In addition, the company could see greater adoption of its chimeric antigen receptor T-cell therapy, Yescarta, in 2019. In Q3 2018, Yescarta sales were an annualized $300 million. As real-world evidence emerges of how well this approach works in non-Hodgkin lymphoma, it could fuel additional sales growth this year.

It shouldn't be forgotten the company has important data coming soon in non-alcoholic steatohepatitis and arthritis. Those are two multibillion-dollar opportunities that could make this an interesting time to consider adding Gilead Sciences stock to healthcare portfolios.

Check out the latest Gilead Sciences earnings call transcript.

Is the market's reaction overblown?

Injured teddy bear with a sling and some bandages

Image source: Getty Images

Chuck Saletta (Johnson & Johnson): As Warren Buffett famously said, "It takes 20 years to build a reputation and five minutes to ruin it." Healthcare titan Johnson & Johnson followed that wisdom in the 1980s, when several people died from taking Tylenol capsules that a tamperer had laced with cyanide.  Its actions there set the standard of how to react to that type of corporate crisis and helped cement Johnson & Johnson's reputation as an ethical business.

Fast-forward a few decades to the recent allegation that Johnson & Johnson may have known for decades about asbestos in its baby powder, and the company's sterling reputation has taken a severe blow. With that news, Johnson & Johnson's stock took a dive,  illustrating the risk to investors' pocketbooks from that sort of knock to a company's reputation.

Despite the headline risk, there's decent reason to believe Johnson & Johnson will emerge from this issue fairly well intact. The company's response has been to show testing records and research studies going back as far as the 1970s suggesting that its talc doesn't contain asbestos. It's also presenting scientific studies showing that talc isn't linked to higher risks of cancer, in response to fears that the compound may be dangerous regardless of the presence of asbestos.

The opportunity for investors in January is that if Johnson & Johnson prevails as cooler heads emerge and the headline risks fade, the stock dive driven by those worries could very well reverse. That makes now a great time for investors who believe in the company's long-term strength to consider a position.

Check out the latest Johnson & Johnson earnings call transcript.