Sign up with an online broker or platform to invest in one or more of these hospital stocks. “Our analysts highlight more defensive sub-sectors (e.g. commercial biopharma, managed care, Medicare-focused names, medtech),” Hall and Woods wrote. The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams and are subject to revision over time.
Hospitals are also facing pressure on profitability as new technological advances pull patients away from hospitals for many types of treatments. For this screen, we looked for the 10 most undervalued stocks in the Morningstar US Healthcare Index all carrying a Morningstar Rating of 4 or 5 stars. Then we looked for healthcare stocks that have earned a Morningstar Economic Moat rating of wide or narrow, signifying the degree to which a company has a durable competitive advantage.
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This has helped make health care stocks some of the most attractive to long-term investors. In addition to being one of the best healthcare stocks, AbbVie is also one of the best dividend stocks to own. The company offers a consistent track record of increasing its dividend payments.
But betting too much on an individual stock can be risky — and buying several individual health care stocks can be expensive. Individual stock-pickers also need to research stocks before buying, which can be time consuming. The first step to invest in health care stocks is to open a brokerage account if you haven’t already. Pharmacy benefit managers like ExpressScripts coordinate between insurers, drug companies and health care providers to deliver medications to patients at the lowest price possible (while still making a profit).
Best Dividend Healthcare Stock: Johnson & Johnson (JNJ)
“Both earnings volatility and frequency of earnings declines have been well below the S&P 500,” she wrote. “Health Care has generated the strongest earnings growth of sectors historically, even topping Tech in recent quarters, with Tech earnings under pressure.” Strategists Jill Carey Hall and Nicolas Woods added in a separate note that downturns are the best economic phases for small-cap healthcare, and that large-cap healthcare typically does even better.
- Its tools help optimize care quality and delivery while reducing costs by leveraging data and analytics.
- These companies earned their spot on the list by both having carved out wide moats and having made smart capital decisions.
- The company is headquartered in Minnesota and its provider networks span the country.
- Humana (HUM, $495.02) is one of the largest health insurers in the U.S., with a special focus on serving the elderly, not surprising given its roots as a nursing home in the 1960s.
- Growth in the sector is being propelled by technological advances, an aging population and improving treatments for chronic diseases and conditions.
Bank of America says the following 16 names are the best defensive and high-upside small- and mid-cap stocks in healthcare. The stocks are ranked from lowest to highest based on how much upside the firm thinks they have relative to its price objectives. Overall, the firm says the stocks could average 50% in potential gains. Meanwhile, Hall and Woods sounded a cautious note about the smaller stocks they cover.
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As defensive stocks, healthcare companies provide steady returns in any market. Because people will always need healthcare, the healthcare sector provides very steady, consistent returns that are uncorrelated with the overall direction of the stock market. Abbott Labs was founded in 1888 and is headquartered outside of Chicago, Ill. The company is a large developer of pharmaceuticals and medical devices, including tests. Abbott is perhaps best known for some of its more innocuous consumables, such as PediaSure, Pedialyte and Similac.
The Motley Fool has positions in and recommends Axsome Therapeutics, Pfizer, and Teladoc Health. In the first quarter, consolidated revenue and consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) beat Teladoc’s expectations. The makers of the medicines that keep us happy and healthy can be great places to invest. For more information about these industries, check out our guide to biotech stocks.
What are the risks of investing in healthcare stocks?
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. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Some health care ETFs, such as the Health Care SPDR Select Sector Fund, are sector-wide ETFs that include companies from all of the industries discussed above. With that in mind, it’s no wonder that health care stocks have outperformed the S&P 500 index over the past five years. NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor.
It’s also one of the largest, with an estimated market value of $7.4 billion globally. Given the economic worth, it’s no surprise it’s a competitive space. So it’s important to isolate the gold standard of companies for a portfolio. A survey conducted by the Bipartisan Policy Center https://forexarticles.net/make-the-deal-negotiating-mergers-and-acquisitions/ showed that 63% of respondents had used telehealth as a preventative service, for a prescription refill, or for a routine visit for a chronic illness. Moreover, eight in 10 surveyed said their primary health issue was resolved and that they would likely use telehealth in the future.
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Around $935 billion, or 25% of the US healthcare expenditure, is wasted due to administrative red tape or inefficiencies, pricing irregularity, and labour shortages. The global healthcare sector is expected to experience a shortage of 12.1 million skilled healthcare professionals by 2035. Experts think an active adoption of technology and virtual delivery systems can help overcome such a significant shortage of healthcare professionals in the near future. HCA Healthcare, Inc. , through its subsidiaries, provides health care services in the United States. In general, the more sophisticated and customized a product or service becomes, the more that proprietary technology plays a role in driving competitive advantage.