As “baby boomers” reach senior citizen status, the population of America will just keep getting older. In fact, this is a milestone year — the first of the nation’s 78 million baby boomers turn 65 this year. And it could be a banner year for health care stocks.
Baby boomer is the name given to the generation born in a “baby boom” following World War II, between 1946 and 1964. Baby boomers represent 26% of the population.
According to the US Administration on Aging, there are already 40 million senior citizens, and that number is expected to double in 2030. This represents a 3.5% gain in the number of seniors per year over the next 20 years. Furthermore, numerous studies have estimated that people older than 75 years of age incur per capita health expenditures up between four and six times higher than those of people from the 25 to 34 year old age group. Therefore, it is reasonable to assume that health care expenditures will increase in the future, and it should benefit companies that provide health care products and services, and health care stocks.
Best Health Care Stocks to Buy
Investors need to keep some cautionary notes in mind. The demographics represent a long-term favorable trend that will be beneficial to the industry, but it will not usher in an era of rapid growth. Furthermore, future levels of government reimbursement will continue to be an issue limiting growth. Stock selection is critical as well, this is one rising tide that will not lift all boats.
My favorite health care stocks at the present time include:
Teva Phamaceutical Industries (NASDAQ: TEVA) is one of my top picks in the big-cap pharmaceutical space. Teva has a balanced business model as it has a leading position in generic drugs, and also has game changing proprietary products, including Copaxone for multiple sclerosis and Azilect for Parkinson’s disease, both illnesses that are more prevalent in late adulthood and in the aging population.