Buy Healthcare Stocks

UnitedHealth Group is the biggest publicly traded health insurance company in the U.S. by market capitalization. Through its network of companies, UnitedHealth offers numerous health insurance plans as well as owns Optum, which provides, among other things, healthcare benefits like health savings accounts (HSAs).

buy healthcare stocks

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Like many other healthcare companies, Thermo Fisher has jumped into the Covid-19 business. The company already offers a test that it says can detect the new omicron variant, making it presently the only FDA-authorized test capable of detecting the variant.

Abbott Labs was founded in 1888 and is headquartered outside of Chicago, Ill. The company is a large developer of pharmaceuticals and medical devices, including tests. Abbott is perhaps best known for some of its more innocuous consumables, such as PediaSure, Pedialyte and Similac. But, like other healthcare companies responding to the pandemic, it also has a Covid-19 test.

Each stock market sector comprises many industries, each with their own nuances, and healthcare is no different. Four of the most important of subtypes of stocks in the case of the healthcare sector include:

As defensive stocks, healthcare companies provide steady returns in any market. Because people will always need healthcare, the healthcare sector provides very steady, consistent returns that are uncorrelated with the overall direction of the stock market.

The U.S. healthcare sector is growing faster than the rest of the economy. Growth in the sector is being propelled by technological advances, an aging population and improving treatments for chronic diseases and conditions.

The rising costs of U.S. healthcare appear unsustainable. This phenomenon is nothing new, but there are increasing calls for government action and regulatory changes to do something about the ever-climbing cost of care and health insurance. Payers and patients are demanding better care at lower prices.

Disruption by new players is a constant threat for established healthcare stocks. More and more tech companies are getting involved in the healthcare sector. Firms like Amazon may significantly disrupt old ways of doing business. Nimble biotechs may outperform stodgy huge pharmaceutical firms.

Sustaining growth can be challenging for some types of healthcare stocks. Companies that make drugs and medical devices must convince health insurers and government agencies to continue buying their products. If these players fail to grant reimbursement approvals, their growth prospects can dim.

The healthcare sector is one of the few industries that has rapidly transformed itself in just a couple of decades. Modern science has enabled firms to not only develop new and novel treatments but also rapidly scale up production and ensure that products have a global reach in the case of a crisis such as the coronavirus pandemic. This trend is clearly evident in the World Health Organization's (WHO) Global Vaccine Report 2022 which outlines that from the 5.8 billion vaccine doses that were shipped globally in 2019 - the last year before the coronavirus ravaged the world - the amount grew almost threefold to a stunning 16 billion in 2021 as the pharmaceutical sector was able to quickly scale up production and ensure that the coronavirus was neutralized.

However, the virus isn't the only frontier for the healthcare industry. The industry is busy tackling diseases and other areas that would have been thought to be impossible just a couple of years ago. For instance, the global stem cell treatment market is one of the fastest growing markets that you're likely to come across. A research report from Markets and Markets outlines that this industry was worth $257 million in 2022 and can grow at a compounded annual growth rate (CAGR) of 16.8% until 2027 to be worth an estimated $558 million by the end of the forecast period. The stem cell industry is one of the most advanced sectors not only in healthcare but also in other unrelated sectors simply due to the complexity of the products involved. Stem cells are one of the few naturally produced biological products that are capable of repairing the human body. The cells are primarily obtained from the amniotic fluid present inside the uterus at the time of pregnancy or the cells that are present in the umbilical cord. Their properties enable them to be used as a treatment for serious diseases such as blood cancer or damaged body organs such as the skin or the eyes.

Another high end healthcare sector is gene editing and sequencing. This market is significantly larger than the stem cell industry, with Markets and Markets estimating that it was worth $5.1 billion in 2021 and outlining that the industry will grow through an 18.2% CAGR until 2026 to be worth an estimated $11.6 billion by the end of the forecast period. Gene editing also counts itself in the list of the most revolutionary technologies known to humankind, as it has allowed scientists to use ribonucleic acids (RNA) derived from bacteria to influence the behavior of cells and change their DNA. This has enabled them to alter the very structural makeup of an organism and prevent certain diseases from occurring. One of the most hyped treatments that has resulted from gene editing is a treatment for thalassemia. Made by bluebird bio, Inc. (NASDAQ:BLUE), the drug has a $2.8 million price tag and is marketed as a one time treatment for beta thalassemia. Another key player in this market is CRISPR Therapeutics AG (NASDAQ:CRSP), whose treatments with the Cas9 enzyme are the bedrock of the industry. However, as evidence of the fact that the gene editing sector still has a long way to go, treatments with Cas9 that target tumor cells have also been shown to have the devastating consequence of potentially activating cancer causing genes as well.

When we take a look at the broader healthcare sector, it becomes clear that the two subsegments mentioned above will outpace the industry in terms of growth. A research report from Market.us estimates that the consumer healthcare industry was worth a whopping $359 billion in 2022 and will grow at an 8.7% CAGR to be worth an estimated $827 billion by the end of 2032. The research firm believes that growth in diseases such as heart problems will spur the demand for over the counter medicines and stimulate the sector. It adds that growth in awareness about healthy living combined with the fact that more prescription free products will drive consumer spending.

With these details in mind, let's take a look at some cheap healthcare stocks, out of which the top picks are AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX), Catalyst Biosciences, Inc. (NASDAQ:CBIO), and Chimerix, Inc. (NASDAQ:CMRX).

To identify cheap healthcare stocks we first made a list of all healthcare companies that have a price to earnings ratio of less than 10. Out of these, the cheapest in terms of the lowest P/E ratio were selected and are listed below.

Cullinan Oncology, Inc. (NASDAQ:CGEM) joins Catalyst Biosciences, Inc. (NASDAQ:CBIO), AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX), and Chimerix, Inc. (NASDAQ:CMRX) in our list of cheap healthcare stocks.

Sensus Healthcare, Inc. (NASDAQ:SRTS) is an American firm that is headquartered in Germantown, Maryland. It manufactures and sells healthcare products that are used by diabetics to monitor their blood glucose levels.

AcelRx Pharmaceuticals, Inc. (NASDAQ:ACRX), Aptevo Therapeutics Inc. (NASDAQ:APVO), Catalyst Biosciences, Inc. (NASDAQ:CBIO) and Chimerix, Inc. (NASDAQ:CMRX) are some great and cheap healthcare stocks.

Healthcare stocks performed well in 2022, driven by a number of factors. One of the main drivers was the ongoing COVID-19 pandemic, which continued to boost demand for healthcare products and services. That substantial success last year is leading investors to search for healthcare stocks that will be big winners in 2023.

Purchasing UnitedHealth Group (NYSE:UNH) stock is an investment in a diversified healthcare company that provides a wide range of products and services to individuals, employers, and government agencies. Its market cap of over $460 billion makes it one of the largest healthcare companies in the world. UnitedHealth operates through several business segments, including UnitedHealthcare (health benefits), Optum (health services), and UnitedHealth Group (parent company).

Vir Technologies is rapidly growing and saw $374.6 million in revenue through the first nine months of 2022. During the same period in 2021, the company reported $103.6 million in revenues, or less than one-third as much, which makes it among the top healthcare stocks to buy.

Veeva Systems provides software as a service for major healthcare companies. Its lineup of customers includes multi-billion dollar behemoths such as Bristol-Myers Squibb, Ely Lilly and Moderna. Veeva has carved out a niche as an enterprise solution for healthcare providers to manage their data and workflows. Its subscription strategy has also made its products very sticky once companies sign up, contributing to extremely high net margins of around 85%.

In the table below, we bucket the percent of stocks in each sector that are down certain percentages from 1-year highs. Much attention is paid to the recent weakness in technology, which is warranted, but the sector that has really experienced a stealth bear market is health care. Only 10% of health stocks are down 0-10%, while 78% of health care stocks are down at least 20%, the marker for a bear market.

We also measure the percent of stocks above the moving average. Our work suggests that when the percent over a moving average falls below 30%, the sector is oversold. Across all time periods health care is oversold using this metric.

The message from relative performance is the same. Year-to-date only 19% of North American health care stocks have outperformed the Morningstar Developed Markets Large-Mid Cap Index. This in the backdrop where 97% of energy stocks have outperformed YTD. 041b061a72