As the world’s population increases in both age and number, growing demand for health insurance and medical devices is a given. In addition to being affordable healthcare investments, these under-the-radar companies present an opportunity for significant returns. Exelixis’ shares are changing hands for just under $22 apiece as of this writing, so investors can get four of them with $100, with change to spare. The biggest reason is Exelixis’ proven ability to develop novel drugs in the field of oncology, one of the largest and most competitive areas in the entire biotechnology industry.
It’s elegantly simple, taking every healthcare component in the S&P 500 Index of large U.S. stocks and excluding all the other stocks from the remaining sectors. Pfizer’s pandemic windfall filled its balance sheet what is a trader with cash, which it’s using to acquire Seagen for $43 billion. Seagen has an up-and-coming portfolio of cancer treatments that analysts believe could generate between $6 billion and $8 billion in annual sales.
- Another stock that should be on the radar of dividend investors is the mega-cap health insurance company UnitedHealth Group (UNH -1.16%).
- The best healthcare ETFs give investors exposure to a defensive corner of the market – one that is likely to benefit from consistent demand and rising prices over the long term.
- Optum offers pharmacy services and technology solutions to clients including payers, care providers, employers, government and consumers.
- Investors looking for affordable healthcare investments might view the recent dip in Pfizer’s performance as intriguing.
- In addition to being one of the best healthcare stocks, AbbVie is also one of the best dividend stocks to own.
The company’s medical devices make a difference in the lives of over 70 million patients each year (or two patients every second) across 70-plus chronic health conditions, such as diabetes and heart diseases. UnitedHealth Group (UNH -1.16%) and Medtronic (MDT -0.42%) are two businesses within the healthcare sector whose proverbial boats could be lifted by this rising tide. Teladoc Health (TDOC 0.32%) is a leader in the global telemedicine market, which is growing in the double digits. And Teladoc’s own double-digit growth in annual visits and revenue in the later stages of the pandemic show that this business can shine well beyond the health crisis. Medtronic’s encouraging and optimistic outlook for this fiscal year explains why the company announced an 8.6% increase in its quarterly dividend earlier this year — its 44th consecutive annual dividend increase.
What are the risks of investing in healthcare stocks?
The list of about 120 total holdings is a global “who’s who” of the industry. While this will add geographic diversification, it doesn’t introduce additional risk given the large and established nature of these stocks. This allows inclusion of stocks such as Danish diabetes care leader Novo Nordisk (NVO), Swiss pharmaceutical giant Novartis (NVS) and London-based drugmaker AstraZeneca (AZN) to name a few. Though there are a lot more smaller names in VHT, it’s worth noting that Vanguard ETF is weighted toward the largest stocks.
- As of the date this article was written, the author does not own any of the above stocks.
- Others, such as Tenet Healthcare, are operators that hire and manage doctors, nurses and technicians to provide health care services to patients.
- The top healthcare stock has a history of rising revenues as well as profits, with the exception of pandemic-affected 2020.
- The list of about 120 total holdings is a global “who’s who” of the industry.
- From biotechnology firms developing innovative therapies to companies revolutionizing medical devices and services, our list of cheap healthcare stock picks is curated with a forward-thinking approach.
Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated. The dividend yield tells you how large a stock’s annual dividend payments are as a percentage of the current share price. Consider the stock’s payout ratio, which measures dividends as a percentage of earnings and indicates how much of the company’s cash is being used to cover the dividend. The lower the payout ratio, the greater the likelihood that the company will be able to keep paying dividends in the future. Some of the best healthcare stocks pay dividends — a portion of earnings that the company returns to shareholders. Dividends can boost the overall return you receive from owning a stock.
Medtronic: Committed to research and development
The company is headquartered in Minnesota and its provider networks span the country. At 11 times forward earnings estimates, they look like a bargain, considering the growth to come and dividend payments in the meantime. Axsome Therapeutics (AXSM -4.34%) is an up-and-coming specialist in central nervous system disorders. One is sleep disorder drug Sunosi, which it bought from Jazz Pharmaceuticals, and the second is Axsome’s own — an antidepressant called Auvelity. Both products could eventually bring in blockbuster revenue, according to company and analyst predictions. With the way that UnitedHealth Group is executing and its low dividend payout ratio, it isn’t hard to see why the company announced a whopping 16% dividend increase earlier this year.
Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance. Healthcare spending in the U.S. is accurate currency strength meter seeing strong, sustained growth. National health spending is projected to grow at an average annual rate of 5.4% through 2028, reaching $6.2 trillion and 19.7% of the country’s GDP. UnitedHealth was founded in 1977, and it has a strong track record of paying shareholders regular dividends.
Both stocks have outperformed the broader market in the last 12 months.
The company operates primarily in environmental sciences, diagnostics and life sciences. The life sciences division represents the core of its healthcare operations, through which it produces a wide array of medical devices and instruments. UnitedHealth Group is the biggest publicly Best ecommerce stock traded health insurance company in the U.S. by market capitalization. Through its network of companies, UnitedHealth offers numerous health insurance plans as well as owns Optum, which provides, among other things, healthcare benefits like health savings accounts (HSAs).
Healthcare stocks should have healthy returns
But if you have a 401(k), you’ll likely instead have to look into mutual funds that focus on the healthcare industry, rather than individual stocks. In this piece, we will take a look at the twelve cheap healthcare stocks to buy in 2023. For more healthcare stocks, head on over to 5 Cheap Healthcare Stocks to Buy in 2023. The fund’s lineup includes small-cap stocks such as neurological disease specialist Catalyst Pharmaceuticals (CPRX) and clinical-stage cancer company Revolution Medicines (RVMD).
FCF is the cash left over after operating expenses and capital expenditures (which includes money spent on buildings, equipment, and land). As with the cash position, the higher a company’s FCF, the stronger its financial position. With the healthcare sector growing significantly faster than the overall global economy, the numbers will almost certainly be much larger by the end of the decade. Humira accounted for 37% of total revenues in 2022, making AbbVie vulnerable to rising competition.
The recent FDA approval of the da Vinci SP system for simple prostatectomies solidifies its role as a revolutionary force in the healthcare industry. Despite this, the company’s stock experienced a 5% drop after-hours trading. However, this brief decline should not eclipse the company’s ongoing commitment to innovation. Their continuous efforts towards progress are noteworthy and essential to consider. Balancing the scales of regulatory risks against the allure of strong financial performance and enticing pricing is key for anyone venturing into healthcare investments.
Top Healthcare Stocks for June 2023
But one of Wall Street’s best healthcare stocks is ramping up its research and development efforts to find new drugs and offset those lost to patent expiration. These include a Keytruda-related lung cancer drug, a melanoma drug co-developed with Moderna (MRNA), and other pharmaceuticals. The best healthcare stocks offer investors a defensive hedge in an uncertain market.
But, like other healthcare companies responding to the pandemic, it also has a Covid-19 test. That means investors can buy in with confidence – unlike some of the smaller and less established funds out there. Of course, many of the healthcare stocks included in ARKG are also among the most volatile. ARKG is actually down 13% over the last 12 months, while the broader S&P 500 Index is up 7%.
For instance, in 2021, the Mayo Clinic and Kaiser Permanente jointly invested $110 million into Medically Home Group, a venture company focused on hospital-at-home services. At the same time, rapidly developing technologies also provide opportunities for both short- and long-term growth potential in the industry. It is also not uncommon for individual healthcare companies to see massive surges in stock price upon the announcement of promising clinical trials or the release of a new therapeutic with strong potential. Focus in the healthcare sector has steadily been shifting away from the coronavirus pandemic to diversification, vertical integration, and new business building in the past few months.
Jazz Pharmaceuticals (JAZZ, $140.40) specializes in developing and commercializing treatments for central nervous system disorders, such as narcolepsy and sleep apnea, as well as oncology-related conditions. For example, drug sales in 2022 were hurt by lower sales of Januvia and Janumet for the treatment of Type 2 diabetes, due to competition from generic drugs in Europe. Further, Humana claims that once a customer stays with its Medicare Advantage plan for two years, that person is usually a customer for life. “Profitability tends to rise with time during that retention period, so maintaining those relationships is especially important to Humana,” Utterback said. This happens mainly in optic nerves connecting the eye retina to the brain and spinal cord, according to the Mayo Clinic. If just looking at the U.S., Enbrel would have comprised 23% of total domestic drug sales, while Prolia would take up 14%.
However, if a company hasn’t been able to deliver strong revenue growth so far, it probably won’t in the future. Here’s what you need to know about investing in healthcare stocks. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. Another reason AMGN is on this list of best healthcare stocks is its promising pipeline of drugs, including Repatha for cardiovascular disease, Lumakras for colorectal cancer and asthma drug Tezspire.
Medical device companies, such as Medtronic, design and manufacture machines that are used to treat specific health issues, such as pacemakers and ventilators. Medical supply companies, such as Patterson Companies, produce and distribute basic products that are used in day-to-day hospital work, such as latex gloves and antimicrobial cleaning supplies. For more information about these industries, check out our guide to biotech stocks.