Healthcare Stocks Are Appealing In Any Market Environment
It’s fair to say that the healthcare sector is one of the most intriguing areas of the market for investors to explore. After all, a global pandemic has reminded the world of just how important quality medical care is.
Healthcare spending in the U.S. accounted for over 19.7% of the country’s GDP in 2020, and that number is expected to get even larger over the next decade. Naturally, there will be plenty of companies that are able to take advantage of this growth, which is why the sector is worth a look for new investment opportunities even during a period of elevated market volatility.
Investors might be in store for some very appealing buying opportunities in 2022 if January is any indication of how the year might unfold in markets, and focusing on a sector like healthcare makes a lot of sense given how the industry will always see heavy spending regardless of economic conditions.
That’s why we’ve put together the following list of 3 great healthcare stocks to buy now. Let's take a closer look at these fantastic companies below.
1. McKesson Corp
If you’re looking for one of the strongest stocks in the market, look no further than McKesson Corp. The stock is roughly flat year-to-date while major indices are getting pummeled, which tells investors that it’s showing a lot of relative strength.
McKesson (NYSE:MCK) is the largest distributor of pharmaceuticals in the U.S. and also distributes medical-surgical supplies, an intriguing business model that is poised to deliver double-digit adjusted EPS growth going forward. The company should see its pharmaceutical sales increase in 2022 thanks to higher prescription volumes as visits to primary care doctors get back to normal after the pandemic.
McKesson's management raised its forward guidance for FY22 last quarter and also delivered total revenues of $66.6 billion in Q2, up 9% year-over-year, which are both signs of a healthy business.
The bottom line here is that McKesson is a dominant force in the pharmaceutical industry with plenty of upside for long-term shareholders to consider, and the fact that the stock price is barely being impacted by the current market weakness speaks volumes about the quality of this company.
2. HCA Healthcare
HCA (NYSE:HCA) is an underrated healthcare company that has come out of the pandemic a more efficient business, which is why it should be on your shopping list at this time. As one of the largest hospital companies in the United States, HCA has the leading market share in some of the largest areas in the country including Texas and Florida.
The company has focused on improving its cost structure over the last few years, which is a move that should pay off over the long term in the form of improved margins. There’s also a good chance HCA will benefit from a rebound in elective procedures going forward, which is another strong reason to consider adding shares.
The company delivered its fourth straight quarterly earnings beat back in October, which saw HCA deliver EPS of $4.57, up from $1.92 in 2020, on revenue of $15.3 billion, up 15% year-over-year. The company will announce its Q4 results on Jan. 27 and could be gearing up for another strong report, so keep an eye on the market's reaction to those numbers towards the end of the month.
With the stock heading closer to testing the 200-day moving average, investors might want to consider the recent weakness in this leading health care services provider as an intriguing opportunity to scoop up shares.
3. Merck & Co
If you’re interested in exposure to a leading biopharmaceutical company that pays a very appealing dividend, Merck & Co is a solid option to consider. The company’s major drugs include treatments in oncology and diabetes, and Merck (NYSE:MRK) also produces vaccines and animal health medications, rounding out a diverse portfolio of products.
The company’s COVID-19 antiviral pill Molnupiravir has been granted emergency use authorization for the treatment of mild-to-moderate coronavirus disease, and it will be interesting to see if it becomes a big winner for the company.
Merck has also announced an agreement to acquire Acceleron, which is a biotech firm that develops therapies for serious and rare diseases. This move improves Merck’s pipeline of new drugs and its cardiovascular disease treatment portfolio and should certainly be viewed as a positive from long-term investors.
It’s also worth noting that the company has been delivering strong earnings recently, including Q3 adjusted EPS of $1.75, up 28% year-over-year. Finally, the fact that Merck stock offers investors a 3.42% dividend yield makes it a top pick in the sector.