Healthcare stocks saw renewed interest due to the onset of the pandemic, but It’s not only COVID that is driving returns. The Baby Boomer generation is getting older, which is resulting in increased demand for healthcare products and services. That’s why investors should consider adding undervalued healthcare stocks such as Ironwood Pharmaceuticals, Inc. (IRWD), Nu Skin Enterprises, Inc. (NUS), and Bristol-Myers Squibb Co. (NYSE:BMY) to their portfolio.The COVID-19 pandemic brought a renewed interest into the healthcare sector, and with the surging Delta variant raging across the country, that interest isn’t expected to dissipate anytime soon. Due to that attention, many healthcare stocks have reached sky-high valuations. It’s not just companies that offer vaccines and therapies for COVID, either.
In fact, the healthcare sector is one of the largest in the U.S. economy. It makes up close to 20% of GDP. As the baby boomer generation gets older, there will be an increased need for pharmaceuticals, biotech therapies, and hospital stays. Approximately $3.5 trillion is spent on healthcare in the U.S., which is only expected to increase in upcoming years.
While healthcare stocks certainly deserve a place in your portfolio, it’s best to avoid stocks with high valuations. That’s why investors should consider healthcare stocks with an overall grade of Buy and a Value Grade of A in our POWR Ratings system. Three stocks that meet that criterion include Ironwood Pharmaceuticals, Inc. (IRWD), Nu Skin Enterprises, Inc. (NUS), and Bristol-Myers Squibb Co. (BMY), which is why I am highlighting them below.