A comprehensive watch list of healthcare stocks trading in the U.S.
People will always need medical treatment regardless of what is going on with the economy, which makes stocks in the healthcare sector consistently reliable investments. The Covid-19 pandemic put a spotlight on the sector, as the pandemic saw healthcare staples secure increased revenue. However, the best healthcare stock investments should not rely on an event like Covid-19 to remain in business. If you are interested in investing in the healthcare sector, consider researching more into the following stocks:
1. Abbott Laboratories
Abbott Laboratories (NYSE:ABT) sells medical devices, diagnostics, nutritional products, and branded generic drugs. This is not to be confused with its spin-off company AbbVie, which is its research-based pharmaceuticals business. Abbott gained some traction in the news when its rapid Covid-19 test received emergency use authorization (EUA). Abbott’s revenue has steadily grown over the past four years, most notably in 2021, with larger-than-average growth in the year likely due to the pandemic. Its price-to-earnings (P/E) ratio is about 30, which is great for long-term investors looking for a good deal as it means its underlying stock price is relatively low compared to its earnings. Abbott’s operating cash flow has increased nicely over the past 4 years as well, which is driving investor confidence.
2. Pfizer
Pfizer Inc (NYSE:PFE) greatly benefited from the Covid-19 vaccines it made, which is reflected in its 2021 revenue and cash flows. Pfizer’s revenue doubled from 2020 to 2021, going from $41 billion in 2020 to $81 billion in 2021. Pfizer does not owe all its success to Covid, though, as it was producing steady revenue before it was producing vaccines for the pandemic. Pfizer produces medicines and vaccines for neurology, cardiology, endocrinology, oncology, and immunology, all of which makes PFE a safe investment as it continues to generate cash flow from prior medicines; however, if Covid-19 vaccines start to slow down this may impact earnings reports going forward.
Pfizer’s P/E ratio is low at just 13, making it a great value investment. Its price-to-free-cash flow (P/FCF) ratio is also great at just 14. These fundamentals combined with a 3% dividend yield make Pfizer a very attractive investment for a long-term play.
3. UnitedHealth Group
UnitedHealth Group Inc (NYSE:UNH) is an American corporation that offers health care products and insurance services. It is the second-largest healthcare company behind CVS Health (CVS) in terms of revenue, and the largest insurance company by total premiums. Its market cap is almost $500 billion, making UNH one of the largest and safest investments within the healthcare sector.
Fundamentally, UnitedHealth Group is an amazing organization because its revenue is consistently growing each year. It has a P/E ratio of about 30. One of the best ways to determine how profitable a company truly is will be to examine its cash flows. Cash flows tell the true story when compared to net income. UnitedHealth Group’s operating cash flow continues to increase year over year which means it will have more money to spend to increase shareholder value and expand its operations.
4. Intuitive Surgical
Intuitive Surgical, Inc. (NASDAQ:ISRG) is an American company that specializes in robotic surgery. It manufactures a system called the da Vinci Surgical System. This surgical system is a robotic surgeon with four robotic arms that are controlled from a surgeon’s console. The da Vinci System is used in multiple procedures including hernia repair and transoral robotic surgery (TORS) for head and neck cancer.
The fundamentals of ISRG are great as well. It has a P/E ratio of 60, which may be a bit high for a value investor, but it is a great candidate for a growth investor. Over the last four years, its revenue and earnings have grown nicely, which shows that the company is expanding and continuing to scale its business to bring in more revenue.
Intuitive Surgical’s quick and current ratios are both around 5, signaling it has plenty of assets to cover its liabilities. The company is also cash flow positive, which means it is generating a profit from its operations (no pun intended).
5. Walgreens Boots Alliance
Walgreens Boots Alliance Inc (NASDAQ:WBA) operates drugstores that provide health services in addition to beauty and health products. It owns pharmacy retail chains Walgreens and Boots and multiple pharmaceutical distribution and manufacturing companies. Walgreens Boots Alliance is a leading retail pharmacy with over 9,000 domestic locations which means it can reach 80% of consumers in the U.S.
Boots represents the international division of the business. The Boots brand goes back over 170 years in the United Kingdom. As of 2022, Boots branded stores are also located in Mexico, Ireland, Chile, and Thailand.
From a fundamental perspective, Walgreens Boots Alliance is trading at a discount. Its P/E ratio is around 6, which is amazingly attractive to value investors. The average S&P 500 (SPX) P/E ratio is about 16, which means anything below this is theoretically a better deal than the index. Additionally, they are bringing in stable revenue and working with positive cash flow. Its P/FCF is about 19, which is also great for those looking for a good value investment.