Stethoscope with clipboard and Laptop on desk,Doctor working in hospital writing a prescription, Healthcare and medical concept,test results in background,vintage color,selective focus
After the pandemic, many countries are optimising healthcare infrastructure. This involves upgrading existing capacity and creating new models that can rapidly respond to shocks (e.g. fungible facilities).
Providers are boosting software investments to improve productivity and financial outcomes, including by optimizing EMR environments, expanding core platforms via acquisitions, and switching vendors. Examples include Microsoft positioning itself as a telehealth platform, Oracle buying EMR leader Cerner, and Amazon acquiring tech-enabled primary care provider One Medical.
1. UnitedHealth Group
There are many ways to invest in healthcare stocks. You can focus on biotech firms that develop new drugs or vaccines to treat illnesses, pharmaceutical companies, medical device makers that produce everything from disposable gloves to artificial heart valves, and healthcare service providers that deliver care directly to patients.
Payer stocks, including health insurers and pharmacy benefit managers (PBMs), also play an important role in the U.S. healthcare system by charging premiums to individuals and employers, while providing services like prescription drug benefits management and healthcare analytics.
Among payers, UnitedHealth Group stands out as a diversified healthcare company with two distinct platforms: UnitedHealthcare and Optum. Together, these businesses create a healthcare services colossus with a long runway for growth. The company is headquartered in Minnetonka, Minnesota.
2. Becton Dickenson
As a supplier of medical equipment, Becton Dickenson plays a key role in healthcare systems and hospitals around the world. Its products include syringes and needles, hospital supplies, and diagnostic devices.
In the early 1990s, as criticism of high healthcare costs accelerated, Howe wisely shifted the company’s focus to lower-cost proprietary products. This included the development of safer needles.
During the COVID-19 pandemic, BD’s products played an important part in diagnosing patients and helping deliver vaccines. As the industry moves beyond Covid-19, BD’s management continues to focus on growth. This includes the separation of its diabetes care business into Embecta, with Becton shareholders receiving one share of Embecta for every five shares they own of Becton. This should improve the company’s ability to focus on innovation.
3. Medtronic
Unlike pharmaceutical companies, which need to wait on clinical trials before releasing their products, medical device and equipment companies can often produce a steady stream of new equipment and services. This recurring revenue stream is one reason why Medtronic can deliver solid returns over the long term.
Investing in healthcare stocks requires patience and deep knowledge of the industry. However, the sector remains a great option for DIY investors. In our opinion, the best way to evaluate healthcare stocks is to look at their sales and earnings growth rates. By comparing revenue and profit figures, you can avoid ranking companies by using backward-looking P/E ratios or earnings estimates that may be influenced by accounting anomalies. Instead, you should look at a company’s recent revenue and profit growth, as well as its potential to grow in the future.
4. Johnson & Johnson
While the Covid-19 pandemic has stifled the majority of economic sectors this year, healthcare stocks have maintained solid performance. As the demand for vaccines, medical equipment and testing continues, companies supplying these solutions should experience substantial long-term returns.
One way to assess a company’s growth potential is by examining its revenue growth rate in recent years. Look for a high rate of growth and check if the company is growing faster than its competitors.
You should also consider whether the company pays dividends, which can boost your overall return. Dividend yields indicate how large a company’s dividend payments are as a percentage of its current share price. You should also look at the company’s PEG ratio, which measures its projected earnings-per-share growth rate. A lower PEG ratio indicates that a stock is more attractively priced.
5. Amgen
Amgen offers a full suite of employee benefits, including health insurance; medical, dental, and vision coverage; retirement savings plans like 401(k) and deferred compensation; and stock options. However, questions about how to best maximize your Amgen benefits often require a financial professional.
Fu-Kuen Lin and his team clone the gene coding for erythropoietin from a fragment of DNA, leading to EPOGEN (epoetin alfa). This achievement launches Amgen.
Amgen’s products and product candidates may face competition from generics, biosimilars, and competing therapies that have lower prices, superior performance, established reimbursement, or other advantages. Furthermore, patent protection for Amgen’s products and product candidates may expire or be challenged, invalidated, or circumvented. Amgen also faces risks from regulatory, clinical, and guideline developments, and domestic and international trends toward managed care and healthcare cost containment.
