Now that we’re in the hangover phase of the Federal Reserve’s first rate rise of the decade, volatility is ramping up.
One way to avoid all this is to stick with quality, and these seven A-rated healthcare stocks — Cigna (CI), China Biologic (CBPO), ICU Medical (ICUI), Novo Nordisk (NVO), Cambrex (CBM), INC Research (INCR), AMN Healthcare (AHS) — are the way to go.
There are a host of opportunities for good companies, from the long-term growth in services as the baby boomers age, to advances in technology and the reorganization of the entire U.S. healthcare system. And these are some of the best.
These healthcare stocks have both strong fundamentals and technicals and will continue to lead for years to come. Some may have slightly more volatility than others, but these aren’t trades, they’re long-term investments.
7 A-rated Healthcare Stocks to Buy: Cigna (CI)
Cigna is still waiting to find out if its proposed merger with No. 1 healthcare insurer Anthem (ANTM) will pass federal scrutiny. The shareholders of both companies have voted their approval and they’ve settle all outstanding lawsuits regarding the merger.
State and federal regulators, as well as consumer rights groups, are still hurdles to be surmounted. The American Heart Association has asked the Justice Department to investigate whether the merger between the two will significantly affect competition and pricing for hospitals. AHA claims it will do just that in 817 geographic markets, which would have a deleterious effect on 45 million healthcare consumers.
Now that the ACA has passed, everyone is now looking to grab as much market share as possible. It’s the simple fact of economies of scale at this point. You can diversify your risk better with more people in your pool.
The stock is off from its highs when the merger was announced, but it’s still up 40% for the year, which is certainly respectable for a major insurance carrier.
Regardless of what happens, CI has a bright future ahead of it.
7 A-rated Healthcare Stocks to Buy: China Biologic (CBPO)
China Biologic has been a favorite for a long time.
And one of the key reasons is because it operates in the Chinese market, but not as a high-flying biotech selling high-margin brand name drugs.
No, it sells precisely the kind of medicines that are in growing demand by this massive economy, as it seeks to build a functional and effective healthcare system for its huge population.
Generally speaking, CBPO immunoglobulin products, or “antibodies” in less scientific terms, help address needs like bacterial or viral infections, hepatitis B, tetanus and a similarly wide array of other conditions. And it does a world-class job of producing them.
So, it’s a “made in China” biotech that is supplying the world’s largest population with modern medicines for fundamental health concerns. That’s a great business model, especially when the government is fully supportive of its efforts.
7 A-rated Healthcare Stocks to Buy: ICU Medical (ICUI)
Beyond the drug makers, the other sector that is seeing solid global demand growth is medical device makers, like ICU Medical. It has markets in over 60 countries.
Essentially ICUI products help healthcare staff improve patient outcomes by minimizing bloodstream infections and preventing exposure to infectious diseases or hazardous drugs.
Drug handling systems for intravenous use, blood sampling devices, hazardous drug handling systems, catheters, you name it. ICUI is a major player in this essential niche.
This isn’t sexy, but it’s fundamental medicine and equipment that will have a growing need in countries around the world, including the U.S., where more and more people are able to access basic healthcare, many for the first time.
7 A-rated Healthcare Stocks to Buy: Novo Nordisk (NVO)
Novo Nordisk is a Danish company that has been around for 90 years now, and it has been one of major companies in fight against diabetes. It launched one of the first insulin-based drugs around 1925 and continues to dominate the space.
And given the fact that type-2 diabetes is growing exponentially, new diabetes treatments are in growing demand.
Also, the new generation of diabetes meds are now working with the kidneys to release excess sugars, as opposed to earlier treatments, which were based on the liver and pancreas and insulin signaling. This has led to some interesting developments in weight loss drugs, and NVO has launched Saxenda recently.
Given NVO’s market might, this could become a real source of growth as well in coming years.
7 A-rated Healthcare Stocks to Buy: Cambrex (CBM)
Cambrex is nothing less than the next iteration in the future of biotech firms.
There are two growing trends in Big Pharma drug development. One is contract research organizations and the other is contract manufacturing organizations.
Basically, drug companies are now focusing on finding new drugs, then they outsource the research and the manufacture to specialists in either of those fields. Instead of trying to do it all themselves, the big companies are finding it’s more efficient to allow other expert niche players to take some of this work off of their balance sheets.
CBM is one of the top CMOs in the game. And the crazy thing is, after soaring more than 133% in 2015, it’s still guiding higher for next year as well. It also already has an impressive client list and usually gets a royalty cut on the drugs it manufactures for it clients, which can be massive and long term for blockbuster drugs.
7 A-rated Healthcare Stocks to Buy: INC Research (INCR)
INC Research is one of the newer members of a growing drug sector — the contract research organization.
It costs about $1 billion to get a drug through all the clinical trials required by the federal government these days.
Given the massive expense to research and develop a given drug, most pharmaceutical firms want to make sure that when the drug goes into trials, there is no margin for error. The trials will be recruited, set up and documented exactly as they should be.
With so much on the line, CROs like INCR are becoming part of that equation with potential blockbusters. And INCR was just named “Best CRO” at the industry’s latest Scrip Awards ceremony.
In a growing CRO sector, INCR is a force that is proving it is capable of growing its book and margins simultaneously.
Up about 90% this year, there’s still plenty of upside for this ambitious company.
7 A-rated Healthcare Stocks to Buy: AMN Healthcare (AHS)
All the top of the line drugs and gadgets in the world matter very little if you don’t have a qualified and competent staff to deploy them.
It’s certainly not the sexiest sector in healthcare, but it is one of the foundational ones in full and part-time healthcare personnel. Actually, AHS is one of the leading providers of this workforce.
From administrators who know how to run a hospital, clinic or practice, to the doctors and nurses who provide their expert services, to consultants how can optimize the operations, AHS is a one-stop healthcare workforce stop.
Given the massive changes with new regulations from the Affordable Care Act to know the new archiving protocol for converting written files to electronic health records, AHS has access to the professionals that make it happen.
Up 50% in 2015, AHS has plenty of growth left for another five years — if it’s not bought out first.