Health care stocks are being mispriced in the markets, leaving room for investors to benefit, according to one portfolio manager.

Speaking with BNN Bloomberg’s Amber Kanwar on Monday, Eden Rahim, portfolio manager and options strategist at Next Edge Capital, said biotech companies that are positioned to launch new blockbuster drugs and successful phase three clinical studies will perform best in an environment that has undervalued their stock price. He also noted a pause in aggressive interest rates hikes as well as increased merger and acquisition (M&A) activity is aiding the sector at large.

"M&A has really picked up this year, we've benefited considerably from it. We think it's just the beginning of a big wave because you've got large pharma (and) biopharma companies in need of growth," he said.

Rahim recommended Biogen Inc. (BIIB), CRISPR Therapeutics AG (CRSP) and Exelixis Inc (EXEL) as his top three picks in the health-care sector.

He, his family members and his investment banking clients do not own any of the stocks mentioned above, however, his firm does.

Check out the full video at the top of the article to learn more.