The U.S.’ sooner-than-expected economic recovery can be attributed in great measure to the rapid developments achieved by several healthcare companies to fight COVID-19. With the economic recovery gaining pace, many healthcare stocks are driving the market to all-time highs. Johnson & Johnson (JNJ), UnitedHealth (UNH), AbbVie (ABBV), and Novartis (NVS) are four such companies and, as such, we think it could be wise to bet on them considering their continuing product innovations.The COVID-19 pandemic proved the extraordinary capacity of the healthcare sector to create and market vaccines within a year of the pandemic's outbreak. Mass vaccinations are now helping the economy reopen much sooner than expected. And because the healthcare sector is usually relatively stable, it’s no wonder investors are piling into healthcare stocks to protect themselves from market volatility. Investor’s interest in healthcare stocks is evidenced by Vanguard Health Care Index Fund ETF Shares’ (VHT) 5.4% gains over the past month compared to the SPDR S&P 500 ETF Trust’s (SPY) 3.8% returns.
The significant gains by healthcare stocks have also been helping broader stock market indexes hover near their all-time highs lately. Also, patients are now expected to reschedule their deferred hospital visits as the fear of the spread of the virus diminishes. This suggests a forthcoming revenue boost to the healthcare sector. Healthcare spending is also expected to increase in the coming months to prevent such a deadly public health crisis in the future. According to a Centers for Medicare & Medicaid Services report, national health spending is expected to hit $6.2 trillion by 2028.
With these factors in mind, we think it could be wise to bet on the shares of established healthcare companies Johnson & Johnson (JNJ), UnitedHealth Group Incorporated (NYSE:UNH), AbbVie Inc . (NYSE:ABBV), and Novartis AG (NVS). These companies have significant market dominance and are introducing new products at a rapid pace.