Healthcare Stock Standouts In Focus
It’s been difficult for investors to trust most areas of the market lately during a very volatile period of trading, yet there are still some sectors that have been holding up well. For example, healthcare stocks have been a bright spot amidst market weakness and could be some of the better performers as we head into 2022. This sector is always worth a look from long-term investors, as the healthcare industry accounts for more than 10% of the GDP of most developed countries and should follow a nice growth trajectory over the next decade.
These stocks are also very attractive thanks to their defensive qualities and their dividends, which could be a big reason why so many are catching a bid in the current market environment. If you’re interested in some of the leading healthcare stocks to buy now, keep reading below for an overview of 3 standouts.
Eli Lilly And Company
First up is Eli Lilly and Company (NYSE:LLY), a major player in the pharmaceutical industry and one of the top picks to consider in the healthcare sector at this time. The company focuses on developing and manufacturing therapies to treat pain, diabetes, cancer, and neurodegenerative diseases and recently hosted an impressive investor day that sent shares soaring to new highs. What really stood out during the event was the fact that Eli Lilly boosted its full-year revenue guidance to $28-$28.3 billion from $27.2-$27.6 billion and referenced strong growth potential and a robust drug pipeline.
The company’s breast cancer drug Verzenio could be a massive winner over the long term, and the Alzheimer’s drug donanemab might gain approval in 2022 and lead to another big revenue stream. Eli Lilly also has an important product that is being used to combat the global pandemic, as its COVID-19 antibodies can help to treat mild to moderate symptoms of the virus. The company expects revenue of $2.1 billion in 2021 from its COVID-19 antibodies and could see additional top-line growth from the treatment next year as new variants continue to spread. The bottom line here is that Eli Lilly is a great buy-the-dip candidate in the healthcare sector given its impressive pipeline, decent dividend, and strong earnings guidance.
Johnson & Johnson
While Johnson & Johnson (NYSE:JNJ) is certainly a healthcare company that has faced its fair share of controversies in recent times, it’s still one of the leading stocks to consider in the sector. The company has created a true healthcare empire, with three divisions including pharmaceutical, medical devices and diagnostics, and consumer. This diverse business model has helped the company become a free cash flow generating machine, which in turn has allowed Johnson & Johnson to grow its dividend for 59 consecutive years. That type of consistency is rare in today’s market, and a 2.45% dividend yield is certainly appealing given inflation concerns.
Investors should also be interested in the fact that Johnson & Johnson will be splitting into two publicly traded companies, one for its consumer products division and one for its pharmaceutical and medical device division. According to the company’s CEO Alex Gorsky, the strategic move “is the best way to accelerate our efforts to serve patients, consumers, and healthcare professionals, create opportunities for our talented global team, drive profitable growth, and—most importantly—improve healthcare outcomes for people around the world." Adding shares of this healthcare giant prior to the split-up might be a good idea, as investors will likely end up with two global leaders that are each able to operate more effectively after the move takes place.
CVS Health Corporation
With healthcare in the spotlight throughout the global pandemic, it makes a lot of sense to consider adding shares of the largest pharmacy health care provider in the United States, CVS Health Corporation (NYSE:CVS). The company has been making some major moves to improve its long-term growth prospects, and it appears that investors are really starting to notice given that the stock is trading at 52-week highs. Notably, the company’s HealthHUB concept could be a big growth driver, as these are remodeled stores that have expanded services and offerings. The goal is to help patients conveniently and affordably manage chronic health conditions with these remodeled stores, and there should be over 1000 operational HealthHub stores by the end of the year.
CVS Health is also worth a look at this time after the company recently announced that it is raising its annual dividend payment by 10% to $2.20 and planning to buy back $10 billion in shares next year. This marks the first instance of a dividend increase or a share repurchase program since 2017, which tells investors that the company is certainly heading in the right direction. Finally, the fact that the company also boosted its full-year earnings forecast is yet another reason to consider adding shares at this time.