While the markets run up and down because tech stocks are doing one thing or another, or retailers struggle to improve same-store sales, there isn’t much debate about the future of the healthcare sector.
Most developed economies’ populations are getting older. In the U.S., that’s certainly apparent as the baby boomers start their decades-long transition to retirement age.
But, the same is also happening in Europe, Japan, even China. That means more people will need more healthcare.
But, you can’t simply buy whatever you want. You have to find stocks that aren’t caught up in the hype. Plenty of small and mid-sized healthcare firms are well-positioned for this megatrend.
I’ve detailed some healthy ones below. Here are 10 healthcare stocks to stave off the market flu and prosper for years to come.
Healthcare Stocks to Stave off the Market Flu: Vertex Pharmaceuticals Incorporated (VRTX)
Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) is a mid-cap biotech company that’s also the leading player in remediating the debilitating effects of cystic fibrosis (CF).
CF affects about 30,000 people in the U.S. and 70,000 people worldwide. The disease begins by affecting the lungs, but eventually moves to other organs, creating more complications as the patient gets older.
VRTX now has a three-drug combination that will help significantly more CF patients increase their lung capacity, as it treats the underlying cause of the disease, rather than just its symptoms.
Vertex also has a handful of other drugs in the pipeline that treat conditions such as sickle cell anemia, influenza and acute spinal cord injury.
Healthcare Stocks to Stave off the Market Flu: Cutera, Inc. (CUTR)
Cutera, Inc. (NASDAQ:CUTR) develops laser and other energy-based systems for cosmetic dermatological systems.
Simply put, the company makes devices used for laser hair removal, lightening pigmentation, even the temporary reduction in the appearance of cellulite. These devices are in increasingly high demand as younger generations in the West are looking for more permanent solutions to shaving.
What’s more, this is no longer just for women. Many men are seeking out these treatments for long-term removal of body hair. This trend has been very popular in Asia, but is really gaining momentum in the West.
Plus, since most of this isn’t covered by healthcare plans, the growing demand is a bullish sign that, as the economy recovers, so will CUTR’s business.
Healthcare Stocks to Stave off the Market Flu: Myriad Genetics, Inc. (MYGN)
Myriad Genetics, Inc. (NASDAQ:MYGN) is a small-cap ($2 billion market cap) company that claims to be the “global leader in personalized medicines.”
That’s certainly a big claim for a small company. But, some of MYGN’s products have gotten very positive attention from the healthcare industry, and big pharma in particular.
To give you better idea of what personalized medicine means, one of the company’s products, GeneSight, tests to determine which antidepressant would be the best for a given patient. Another, RiskScore, helps women predict the odds of developing breast cancer, given genetic markers and clinical risk factors.
MYGN also has a drug that’s being co-marketed with two big pharmaceutical firms for use in treating ovarian cancer.
This new field has a lot of potential, but it will be a volatile ride if you decide to get on board.
Healthcare Stocks to Stave off the Market Flu: Sinovac Biotech Ltd. (SVA)
Sinovac Biotech Ltd. (NASDAQ:SVA) is the largest vaccine maker in China. That may not sound like the sexiest kind of drug company, but the fact is, with 1.4 billion people — and a relatively antiquated healthcare system for most of them — starting with the basics is huge.
China is now the second largest economy in the world, yet it has yet to break through its image as a developing nation. It wants inclusion and respect as a developed nation but has to build out its infrastructure that dates back to Mao’s agrarian reform movement.
Currently, China has dozens of cities with more than 1 million people, as citizens leave the farms for work in the digital era. But, that concentration of people also means viruses can spread quickly and disrupt huge populations.
As a native Chinese company, SVA will get a significant amount of support from the government as it modernizes healthcare for the population. It only has a $470 million market cap now, but it has huge potential.
Healthcare Stocks to Stave off the Market Flu: Corcept Therapeutics Incorporated (CORT)
Corcept Therapeutics Incorporated (NASDAQ:CORT) is a $1.9 billion market cap biotech that specializes in severe metabolic, oncologic, and psychological disorders.
One of its top drugs, Korlym, targets Cushings Syndrome, which is brought on by long-term exposure to an overproduction of the stress hormone cortisol.
Perhaps the most interesting aspect of CORT’s deep understanding of cortisol and how it effects the body is the notion that its regulation may have significant effects in treating everything from Type II diabetes to cancer to depression.
Right now, CORT is engaged in a battle with leading generics producer Teva Pharmaceuticals Industries Ltd (NYSE:TEVA) over alleged patent infringement for its top-selling drug, Korlym. TEVA is hoping to make a generic version.
This battle has taken some of the steam out of CORT stock for now, but its unique and promising pipeline means you’re buying at a discount.
Healthcare Stocks to Stave off the Market Flu: Chemed Corporation (CHE)
Chemed Corporation (NYSE:CHE) is an interesting business. It has two divisions: a palliative care and hospice division called Vitas Healthcare, and Roto-Rooter, a franchise plumbing business.
While those seem like strange partners, CHE has a respectable $4.5 billion market cap and more than 14,000 employees.
Obviously, in this format Vitas Healthcare is the side of the operation that bears highlighting.
The fact is, as the population ages, the more palliative care — which includes physicians, nurses, social workers, and clergy — people will require. Plus, the fact that these services are the last stage of the journey for patients also means they are more likely to be covered, since they are not open-ended expenses.
CHE stock has well outpaced the market over the past 12 months.
Healthcare Stocks to Stave off the Market Flu: WellCare Health Plans, Inc. (WCG)
WellCare Health Plans, Inc. (NYSE:WCG) is a mid-cap provider of managed care services for government-funded healthcare programs. That means the company manages Medicare and Medicaid for its subscribers. It has about 4.4. million members across all 50 states.
Given the changing face of healthcare in the U.S., and all the talk of insurers and healthcare providers merging with all manner of firms in complementary industries, WCG is certainly in a dynamic sector.
But, that can be a good thing, since it is unlikely that Medicare and Medicaid will be going away any time soon. And, a company that knows how to manage these plans — and has a 4.4 million person customer base — has a lot going for it.
Healthcare Stocks to Stave off the Market Flu: Magellan Health Inc (MGLN)
Magellan Health Inc (NASDAQ:MGLN) is another mid-cap healthcare company that works with government-funded healthcare programs, has a prescription benefits management (PBM) arm, and manages specialty programs like employee assistance programs (EAPs) and physical programs.
MGLN is a triple threat. Given its size and the interest in this space, it is a perfect addition to a larger company looking to consolidate its place in the industry, or for a new company to expand in the changing healthcare arena.
MGLN stock is up 60% over the past 12 months, which is impressive for a healthcare company. And, it’s likely that any buyout offer would see it go at an even larger premium.
Healthcare Stocks to Stave off the Market Flu: U.S. Physical Therapy, Inc. (USPH)
U.S. Physical Therapy, Inc. (NYSE:USPH), as its name implies, provides pre- and post-operative care for orthopedic and sports-related disorders. It also manages physical therapy facilities for third parties.
While it’s a small-cap stock ($1 billion market cap), USPH has spread its services across the U.S., with more than 500 clinics in 42 states.
This is one of those key niches that will see great benefit from the graying of the population. Decentralized, privately run rehab facilities for muscle and joint issues are either magnified by aging or are traumatic sports injuries (which will likely end up chronic age-related issues).
It’s no surprise that patient revenue was up 14% for Q4 compared to the same quarter last year, and management revenue also increased.
Healthcare Stocks to Stave off the Market Flu: Almost Family, Inc. (AFAM)
Almost Family, Inc. (NASDAQ:AFAM) is a small-cap company with big plans.
On April 1st, management finalized a merger with Louisiana-based LHC Group, Inc. (NASDAQ:LHCG), making the combined company the second-largest home healthcare provider in the U.S.
AFAM is in a particularly interesting sector of healthcare that is starting to grow rapidly. And given its size, it’s in a perfect place to take advantage of all that growth.
Healthcare has become decentralized to the point where many people can get the care they need in their homes. With assisted living facilities being to costly for many people, or they simply want to age in their homes, bringing various services to them that are increasingly covered by Medicare or Medicaid helps both patients and the federal and state government’s healthcare bills.
This is a trend that will continue and AFAM is becoming a key player in the space.