Figuring out which healthcare stocks to buy has never been an easy task. After all, many names in the space are notorious for volatility as they can easily meltdown on the basis of a poorly received clinical trial. Adding to the complications is our current political environment. President Trump has repeatedly blasted the Affordable Care Act, promising to overhaul our healthcare system.
Naturally, many healthcare stocks have experienced a tumultuous ride in the markets under the Trump White House. But that being said, the President has enacted positive proposals, such as his promise to reduce drug prices. And whether he lives up to his boasts may be a moot point. Because Washington is almost in crisis, Trump must tone his act down if he wants another term.
Plus, healthcare stocks don’t come in one flavor. You can elect the riskiest names with the most upside potential, or you can settle in with proven companies. Based on current developments, such as exciting new medical technologies as well as a generally stable economy, the healthcare sector should receive more tailwinds than headwinds.
Here are my picks for healthcare stocks to buy, which cut across several subsectors within the industry:
Johnson & Johnson (JNJ)
Typically, when investors seek healthcare stocks to buy, they’ll go for the sexy, transformative names. I don’t disagree with that strategy. That said, the healthcare market is often a volatile one. Under politically uncertain times such as this, it pays to go with a proven, long-term winner such as Johnson & Johnson (NYSE:JNJ).
On paper, JNJ stock isn’t enjoying a standout performance in 2018. Year-to-date, shares are up less than 3%. However, since the second half, JNJ is well up into double-digit territory. And despite its recent run-up, I still like its chances to go further in 2019 and beyond.
As you might imagine from its $377 billion market capitalization, an impressive drug pipeline underlines JNJ stock. But a key difference between Johnson & Johnson and its peers is treatment effectiveness. The company has several therapies that are in late-stage clinical trials. Moreover, most of them are in lucrative categories, such as cancer or HIV-related treatments.
Plus, JNJ stock pays out a fairly decent 2.6% dividend yield.
Becton Dickinson (BDX)
Most people are familiar with Levi Strauss’ rise to fame and fortune. When Gold Rush fever took over California, Strauss trekked westward, which wasn’t unusual. What was peculiar (and ingenious) is that Strauss sought to make his money through entrepreneurship. He setup a wholesale dry goods business, and later invented blue jeans.
In a similar way, trying to pick the best healthcare stocks to buy can be an ordeal. This sector is unique from others in that even the most fundamentally robust company can utterly collapse on a single bad report. This is why if you want the most protection, you should consider Becton Dickinson (NYSE:BDX).
With BDX stock, you’re not gambling on which company will develop the next groundbreaking therapy. Instead, almost anybody who’s anybody utilizes Becton Dickinson products. That’s because the company produces some of the best medical tools and devices. In addition, they specialize in scientific-research equipment.
Like Johnson & Johnson, BDX stock pays out a dividend, providing it with some downside protection in uncertain markets.
Regeneron Pharmaceuticals (REGN)
We often say that the eyes are the windows to our souls. We should also acknowledge just how amazing they are. No matter how advanced optical tech becomes, no camera can zoom in and out quicker than the human eye. It’s the one sense that most of us are unwilling to sacrifice, particularly because it’s irreplaceable.
That finality leaves many patients suffering degenerative eye disease in an excruciating dilemma. Regeneron Pharmaceuticals (NASDAQ:REGN) would very much like to change this paradigm. Recently, the Food and Drug Administration approved a supplemental Biologics License Application for Eylea, a treatment for age-related macular degeneration. This disease is the leading cause of vision loss; thus, the implications for REGN stock are enormous.
Beyond that, Regeneron has several other drugs in the pipeline, including targeted antibodies for specific cancers. The company also offers solutions for more common problems, such as asthma or back pain.
Despite its enormous potential, REGN stock experienced volatility throughout the second half of 2017 and into this year. Although it’s a speculative play, I believe risk-tolerant investors can do well going with REGN.
Magellan Health (MGLN)
In almost every list of healthcare stocks to buy, you’ll predominantly see biotechnology firms promising the next advancement in medicine. That’s pretty much the point about biotechs, so I don’t begrudge anyone who has this idea in mind. However, an often overlooked component within this investment sector is mental health.
According to the National Alliance on Mental Illness, almost 19% of Americans experience mental-health issues in a given year. Even more alarming, over 21% of youth in this country experience some kind of mental disorder in their lifetime. Magellan Health (NASDAQ:MGLN) specializes in this arena, offering dynamic services such as a personalized plan for mental and behavioral wellness.
In this regard, MGLN stock could be considered a “feel good” investment. But Magellan goes beyond merely providing mental healthcare. The company runs a pharmacy benefit management business, facilitating critical money savings for patients.
One risk factor to note is that MGLN stock has been incredibly volatile this year. Therefore, it doesn’t suit risk-averse investors. But if you’re looking for a contrarian trade that’s also a sentimental favorite, MGLN could surprise.
Tandem Diabetes Care (TNDM)
You don’t have a complete list of healthcare stocks to buy without at least one high-risk, high-reward opportunity. So for those of you who live life on the edge, I bring to you Tandem Diabetes Care (NASDAQ:TNDM).
TNDM stock veritably mooned when the underlying company became the first to offer a touchscreen insulin pump. Unlike competitor models, Tandem’s t:slim X2 insulin pump is stylishly designed, and more importantly, it doesn’t require any finger-sticking. That’s a big plus for diabetes patients who must endure these pains to monitor blood glucose levels.
Additionally, Tandem’s insulin pump is built out of aluminum as opposed to plastic. It’s also water-resistant up to three feet of water. In other words, the company created a product that suits the lifestyle of the patient, not the other way around.
Having said that, TNDM stock is not without serious risks. For starters, shares are already up over 1,400%, so this is no early bird opportunity. Plus, Tandem does nothing but diabetes and they’re proud of that fact. But that leaves TNDM exceptionally vulnerable if their core product hiccups.
So far, though, the company has made significant progress. Plus, TNDM stock is down 30% from its all-time closing high. For your gambling fund, Tandem is worth a look.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.