Britain's Brexit vote has simply churned out eye-popping market movements . A worldwide slump had investors fretting about the start of the next bear market. A market snapback pushed the Standard & Poor's 500 index back to 2,100 and challenging all-time highs. Safety-seekers have sent gold through the roof, and chased Treasurys sky-high as well.

And health care flew under the radar with a move of its own.

Last week, the Health Care SPDR exchange-traded fund (ticker: XLV ) put up the second-best gain of any of SPDR's sector-specific funds at 4.11 percent, trailing only the Real Estate SPDR ( XLRE ) at 4.38 percent. That helped extend a couple of months of outperformance – a welcome run for a sector that has trailed the broader market for much of the past year and a half, including a run that saw the XLV lose 5 percent versus flat returns for the S&P 500.

The weakness certainly has disappointed investors who were sold on the sector's numerous drivers, such as biotech's explosive growth potential and the long-term tailwinds for pharmaceuticals, medical devices and managed care services amid an aging population – not just in the U.S., but across much of the globe.

Was last week's run a launching pad to a sustained run of outperformance, or just a glimmer of hope that won't materialize into anything more?

[See: 7 Stocks to Buy When a Recession Hits .]

Health care has a return to sanity. Even though health care's lag is well more than a year old, it's still a relatively new development – the XLV has outperformed the S&P 500 across the past three-, five-, 10- and 15-year periods, with the aging of baby boomers , increased pricing for drugs and more global dollars available for health care pushing the sector higher.

But at some point, even the best narratives apparently need a breather.

"What we have seen over the past year has been a return to sanity in the pricing of health care stocks," says Michael Palumbo, author of Calculated Risk and founder of Third Millennium Trading. "The old perception was that because of the demographics of wealthy countries like the U.S., Canada and parts of Europe showing dramatic increases in the number of people over 65, that health care stocks were in a position to grow at very high rates. Pricing in these stocks grew to levels that were unsustainable even for the most positive of industry outlooks."

In the meanwhile, a few issues started to seep in, too.

"What's really providing huge headwinds, stating the obvious, is the Affordable Care Act, the pressures of pricing and really kind of an anti-profit mentality inside government," says Joe Heider, president at Cirrus Wealth Management, a financial advisory based in Cleveland.

The prime example of the latter point came in September 2015, when presumptive Democratic presidential nominee Hillary Clinton took a shot across the bow of health care's most robust growth driver: biotech stocks, calling price gouging in the specialty dug market "outrageous."

Her outrage was triggered by Turing Pharmaceuticals' nearly 5,500 percent hike in Daraprim – which treats malaria, among other uses – from $13.50 per pill to $750. Biotech stocks, which already were letting off some froth from their July highs, swooned in response.

[See: The Perfect 10 Shares .]

"Stock prices of major pharmaceutical companies have dropped significantly as the perception of profitability 'to the moon' has changed," Palumbo says, adding that ultimately, it needed to happen. "I believe this was a healthy if painful repricing of the industry, as companies were previously priced for perfection and stocks like Biogen ( BIIB ), Gilead Sciences ( GILD ) and Celgene ( CELG ) were the darlings of many of the bigger hedge funds. Many of these funds were playing the momentum in the industry that had built up since the financial crisis and when this momentum ceased last summer, these hedge funds were caught long and wrong, many with oversized positions in the sector."

But that doesn't mean experts are suggesting buying with both fists at this point.

Like health care, but don't love it. If Wall Street expectations were the end-all gauge of market sentiment, health care stocks would be a five-star recommendation. FactSet data shows that the S&P 500 health care sector has the highest percentage of "buy" ratings across all 10 sectors at 56 percent (including 41 percent "hold" ratings and just 2 percent "sell." And health care would seem due for a short-term bounce given 2 percent earnings growth expectations for the sector – the fourth-highest estimate in the index.

Still, while market experts seem to like health care more than they hate it, they certainly don't love it.

"I wouldn't necessarily say it's overbought, I would say that the sector is broadly overpriced," says Charles Sizemore, a portfolio manager on Covestor and chief investment officer at Sizemore Capital Management, a registered investment advisor in Dallas. "Investors have been overpaying for defensive sectors, such as health care and consumer staples. And while it's understandable, as traditional defensive options like bonds are even more overpriced, it doesn't mean it's a good idea. Despite the positive demographic trends for health care, if you overpay you're not likely to do well.

Palumbo is a bit more bullish on the sector, but with a caveat.

"I believe the health care sector is now at a level where investors can begin to accumulate long positions without nearly the risk there was a year ago," he says. "The demographic tailwinds still prevail, but most of the irrational exuberance has left the sector."

However, thanks to factors like increased public scrutiny and tightening governmental budgets, "I would not put an overweight on the sector, though, as these factors will limit upside potential in the industry," he says.

Heider, for one, does see a potential rebound play in biotech stocks , if only because they've been so hammered … but you'll have to wait a few months for that to develop.

"I think (biotech stocks') chances are better after the election, just because until then, politicians will keep beating on them," he says. "Even if Hillary gets in, with politics being politics, the rhetoric will be a lot different than the economic reality."

Still, cautious optimism remains the rule of the day.

[See: 11 Great Investing Tips for Women .]

"I think health care will have at least market-like returns for the foreseeable future, if not slightly better," Heider says. "But I don't think it'll be as strong in relative terms as it has for the last several months."

Best Health Care Stocks

Stock

Price

1-Year Return



Celator Pharmaceuticals Inc


CPXX

$30.20

1312.15%



Lifevantage Corp


LFVN

$14.05

253.32%



Anavex Life Sciences Corp


AVXL

$6.26

223.63%



Sophiris Bio Inc


SPHS

$2.18

163.67%



Nymox Pharmaceutical Corp


NYMX

$3.26

150.38%



Exelixis Inc


EXEL

$8.05

137.50%



AxoGen Inc


AXGN

$7.12

119.18%



Electromed Inc


ELMD

$3.80

117.05%



Enzo Biochem Inc


ENZ

$6.01

105.15%



MediciNova Inc


MNOV

$7.91

98.01%

Stock

Price

1-Year Return

223.63%

Stock

Price

1-Year Return

Stock information correct as of July 6, 2016, 9:20 a.m.

Or see U.S. News’ list of Best Health Care Stocks »

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Raymond Mitchell, Author

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