Ten Healthcare Stocks to Watch!
Types of Healthcare Stocks
A Washington State University overview, defines the healthcare sector as: industries and sub-industries involved in products and services related to health and medical care.
These include:
Pharmaceuticals: The discovery, development, and manufacture of drugs and medications
Biotechnology: The use of biology to solve problems and make useful products
Equipment: The manufacture of healthcare and medical devices
Distribution: All distributors and wholesalers of healthcare products. This ranges from pharmacies to large-scale wholesalers of medical devices
Facilities: Where patients receive health or medical care
Managed Healthcare: The health insurance industry. uses a variety of techniques to reduce the cost of health benefits and improve quality of care
Healthcare stocks include companies that take part in these sub-industries. Their goal is to provide health and medical care to patients.
Outlook for Healthcare Sector
The health care sector has been experiencing never-before-seen transformation driven by changes to technology, shifts to demographics, and the ever changing needs of patients. According to Deloitte, the effects of COVID-19 are still contributing to shortages of labor and increased costs in the sector.
It is not all doom and gloom, however. Technology has been advancing at a rapid rate, especially AI and remote technology. This will play a pivotal role in streamlining healthcare processes and improving patient care.
In 2023, there was a great deal of uncertainty regarding the healthcare sector. With the Federal Reserve hiking interest rates, inflation became difficult to manage. Increased cost of capital in an uncertain post-COVID world also posed challenges for companies in the sector. As a result, 2023 volume dropped compared to the numbers achieved in 2022. Deal volume for life sciences declined from 1,133 to 919, and healthcare dropped from 1,001 to 857.
Stocks to Watch
Pfizer (PFE)
Pfizer is an American pharmaceutical and biotechnology corporation based in New York and founded in 1849. Over the past few years, Pfizer has become one of the most popularly traded companies in the entire healthcare sector. They were also 38th on the Fortune 500 list for 2024.
Based on a formula developed by GuruFocus, the current intrinsic value of Pfizer stock is $56.17, which is significantly higher than the current stock value of $25.40. Additionally, the annual dividend yield for Pfizer was recently increased to 6.65% or $0.42 quarterly per share. These factors make Pfizer an attractive stock pick for those looking in the healthcare sector.
Gilead Sciences, Inc. (GILD)
Gilead Sciences, Inc. is an American biopharmaceutical company based in Foster City, CA. Their focus is the research and development of antiviral drugs used in the treatment of Influenza, COVID-19, Hepatitis, and HIV/AIDS.
Based on the same GuruFocus formula, the intrinsic value of their stock is $79.94, higher than the current stock price of $65.42. The annual dividend yield for Gilead is 4.71%, or $0.77 quarterly per share. After a difficult quarter, their most recent earnings call exceeded expectations. This should make Gilead a more attractive option for investors.
Merck & Co., Inc. (MRK)
Merck & Co., Inc. is an American pharmaceutical company founded in 1891 and based in Rahway, NJ. They specialize in the development of vaccines and biologic therapies, including immunizations against HPV and chickenpox.
The GuruFocus formula places the intrinsic value of Merck at $55.24. This is well below the current stock price of $131.20 and indicates that Merck may be overvalued based on their free-cash-flow. Their dividend yield is 2.35% and with a quarterly payout of $0.77.
Medtronic PLC (MDT)
Medtronic PLC is an Irish medical device company headquartered out of Minneapolis, Minnesota. They specialize in the manufacture and development of medical devices such as pacemakers and medical implants.
According to the formula from GuruFocus, Medtonic’s intrinsic value is $68.50. This is below the current stock price of $80.89, but could still be one to keep an eye on due to their dividend yield of 3.41% annually. The quarterly dividend amount is $0.69.
Johnson & Johnson Services, Inc. (JNJ)
Johnson & Johnson Services, Inc. is an American pharmaceutical and medical device manufacturer that is headquartered in New Brunswick, New Jersey. They are often ranked in the top 50 of the Fortune 500, most recently ranked 40th. They specialize in the development of prescription drugs and medical devices.
GuruFocus places the current intrinsic value of Johnson & Johnson at $96.70. The current stock price is $151.18, so still above the intrinsic value. The annual dividend of 3.28% and quarterly dividend of $1.24 do make this an interesting option if the stock price drops.
CVS Health Corporation (CVS)
CVS Health Corporation is an American healthcare company that is best known for owning and operating CVS Pharmacy. They are headquartered in Woonsocket, RI, and operate one of the largest retail pharmacy chains in the world.
Our GuruFocus formula places the intrinsic value of CVS at $137.55. This is two and a half times higher than the current trading price of $56.31. With an annual dividend yield of 4.72% and a quarterly yield of $0.66, this is a stock to strongly consider.
Bristol-Myers Squibb Company (BMY)
Bristol-Myers Squibb Company is an American pharmaceutical company based out of Princeton, New Jersey. They specialize in the development of treatments for cancer, HIV/AIDS, diabetes, and arthritis. They also consistently rank in the Fortune 500.
GuruFocus’ formula puts the intrinsic value of BMY as $68.34. The current trading price is $44.21, indicating that this may be another stock worth strongly considering. The current dividend yield of 5.46% is higher than any other stock in this list, further strengthening it’s place on this list.
The Cigna Group (CI)
The Cigna Group is an American healthcare and insurance company based in Bloomfield, Connecticut. Their focus is on employer focused healthcare coverage, as well as offering Medicare and Medicaid. They are among the largest insurance companies in America, and last year ranked 15th on the Fortune 500 list.
Our trusty formula placed the intrinsic value of Cigna at $488.99. This is much higher than the current trading price of $357.18, suggesting that this is a stock to watch. The dividend yield of 1.59% is lower than the others included on the list. This shouldn’t discourage investors from considering Cigna.
Centene Corporation (CNC)
Centene Corporation is a managed care company based in St. Louis, Missouri. They are an intermediary for government-sponsored healthcare companies, and last year ranked 25th in the Fortune 500 list.
Centene’s intrinsic value is placed at $118.28. This is about 60% higher than the current trading price of $72.86. This indicated Centene is another stock to pay attention to, despite not having any dividend offering. This is the only company included on this list to not pay dividends. This should not be the sole reason for dismissing this stock, however, and should remain an option for investors.
Ten Healthcare Stocks to Watch!
Types of Healthcare Stocks
A Washington State University overview, defines the healthcare sector as: industries and sub-industries involved in products and services related to health and medical care.
These include: Pharmaceuticals: The discovery, development, and manufacture of drugs and medications Biotechnology: The use of biology to solve problems and make useful products Equipment: The manufacture of healthcare and medical devices Distribution: All distributors and wholesalers of healthcare products. This ranges from pharmacies to large-scale wholesalers of medical devices Facilities: Where patients receive health or medical care Managed Healthcare: The health insurance industry. uses a variety of techniques to reduce the cost of health benefits and improve quality of care
Healthcare stocks include companies that take part in these sub-industries. Their goal is to provide health and medical care to patients.
Outlook for Healthcare Sector
The health care sector has been experiencing never-before-seen transformation driven by changes to technology, shifts to demographics, and the ever changing needs of patients. According to Deloitte, the effects of COVID-19 are still contributing to shortages of labor and increased costs in the sector.
It is not all doom and gloom, however. Technology has been advancing at a rapid rate, especially AI and remote technology. This will play a pivotal role in streamlining healthcare processes and improving patient care.
In 2023, there was a great deal of uncertainty regarding the healthcare sector. With the Federal Reserve hiking interest rates, inflation became difficult to manage. Increased cost of capital in an uncertain post-COVID world also posed challenges for companies in the sector. As a result, 2023 volume dropped compared to the numbers achieved in 2022. Deal volume for life sciences declined from 1,133 to 919, and healthcare dropped from 1,001 to 857.
Stocks to Watch
Pfizer (PFE)
Pfizer is an American pharmaceutical and biotechnology corporation based in New York and founded in 1849. Over the past few years, Pfizer has become one of the most popularly traded companies in the entire healthcare sector. They were also 38th on the Fortune 500 list for 2024.
Based on a formula developed by GuruFocus, the current intrinsic value of Pfizer stock is $56.17, which is significantly higher than the current stock value of $25.40. Additionally, the annual dividend yield for Pfizer was recently increased to 6.65% or $0.42 quarterly per share. These factors make Pfizer an attractive stock pick for those looking in the healthcare sector.
Gilead Sciences, Inc. (GILD)
Gilead Sciences, Inc. is an American biopharmaceutical company based in Foster City, CA. Their focus is the research and development of antiviral drugs used in the treatment of Influenza, COVID-19, Hepatitis, and HIV/AIDS.
Based on the same GuruFocus formula, the intrinsic value of their stock is $79.94, higher than the current stock price of $65.42. The annual dividend yield for Gilead is 4.71%, or $0.77 quarterly per share. After a difficult quarter, their most recent earnings call exceeded expectations. This should make Gilead a more attractive option for investors.
Merck & Co., Inc. (MRK)
Merck & Co., Inc. is an American pharmaceutical company founded in 1891 and based in Rahway, NJ. They specialize in the development of vaccines and biologic therapies, including immunizations against HPV and chickenpox.
The GuruFocus formula places the intrinsic value of Merck at $55.24. This is well below the current stock price of $131.20 and indicates that Merck may be overvalued based on their free-cash-flow. Their dividend yield is 2.35% and with a quarterly payout of $0.77.
Medtronic PLC (MDT)
Medtronic PLC is an Irish medical device company headquartered out of Minneapolis, Minnesota. They specialize in the manufacture and development of medical devices such as pacemakers and medical implants.
According to the formula from GuruFocus, Medtonic’s intrinsic value is $68.50. This is below the current stock price of $80.89, but could still be one to keep an eye on due to their dividend yield of 3.41% annually. The quarterly dividend amount is $0.69.
Johnson & Johnson Services, Inc. (JNJ)
Johnson & Johnson Services, Inc. is an American pharmaceutical and medical device manufacturer that is headquartered in New Brunswick, New Jersey. They are often ranked in the top 50 of the Fortune 500, most recently ranked 40th. They specialize in the development of prescription drugs and medical devices.
GuruFocus places the current intrinsic value of Johnson & Johnson at $96.70. The current stock price is $151.18, so still above the intrinsic value. The annual dividend of 3.28% and quarterly dividend of $1.24 do make this an interesting option if the stock price drops.
CVS Health Corporation (CVS)
CVS Health Corporation is an American healthcare company that is best known for owning and operating CVS Pharmacy. They are headquartered in Woonsocket, RI, and operate one of the largest retail pharmacy chains in the world.
Our GuruFocus formula places the intrinsic value of CVS at $137.55. This is two and a half times higher than the current trading price of $56.31. With an annual dividend yield of 4.72% and a quarterly yield of $0.66, this is a stock to strongly consider.
Bristol-Myers Squibb Company (BMY)
Bristol-Myers Squibb Company is an American pharmaceutical company based out of Princeton, New Jersey. They specialize in the development of treatments for cancer, HIV/AIDS, diabetes, and arthritis. They also consistently rank in the Fortune 500.
GuruFocus’ formula puts the intrinsic value of BMY as $68.34. The current trading price is $44.21, indicating that this may be another stock worth strongly considering. The current dividend yield of 5.46% is higher than any other stock in this list, further strengthening it’s place on this list.
The Cigna Group (CI)
The Cigna Group is an American healthcare and insurance company based in Bloomfield, Connecticut. Their focus is on employer focused healthcare coverage, as well as offering Medicare and Medicaid. They are among the largest insurance companies in America, and last year ranked 15th on the Fortune 500 list.
Our trusty formula placed the intrinsic value of Cigna at $488.99. This is much higher than the current trading price of $357.18, suggesting that this is a stock to watch. The dividend yield of 1.59% is lower than the others included on the list. This shouldn’t discourage investors from considering Cigna.
Centene Corporation (CNC)
Centene Corporation is a managed care company based in St. Louis, Missouri. They are an intermediary for government-sponsored healthcare companies, and last year ranked 25th in the Fortune 500 list.
Centene’s intrinsic value is placed at $118.28. This is about 60% higher than the current trading price of $72.86. This indicated Centene is another stock to pay attention to, despite not having any dividend offering. This is the only company included on this list to not pay dividends. This should not be the sole reason for dismissing this stock, however, and should remain an option for investors.