7 Hot Healthcare Stocks With the Potential to Outperform


  • Here are seven healthcare stocks to buy now.
  • Danaher (DHR): The life sciences and medical diagnostic company has been a long-term winner for shareholders.
  • IQVIA (IQV): The company that runs clinical trials can exploit an $8 billion market.
  • Abbott Laboratories (ABT): The company’s sales could soar as Covid-19 lockdowns in China ease.
  • UnitedHealth Group (UNH): The largest health insurer in the world continues to produce stellar earnings.
  • Humana (HUM): HUM is another successful health insurer that is growing and gaining market share.
  • Eli Lilly (LLY): The company’s obesity medication could become a global blockbuster.
  • Moderna (MRNA): MRNA’s Covid-19 vaccine sales remain brisk, and it has a strong pipeline.
healthcare stocks to buy - 7 Hot Healthcare Stocks With the Potential to Outperform

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Healthcare stocks are hot right now. The S&P 500 Health Care index has gained 3% over the last 12 months versus the 8% decline of the broader S&P 500 benchmark index . Reasons that healthcare stocks have outperformed include several drivers such as aging populations, increased spending on healthcare by developing nations, and technological advancements in both medical devices and prescription drugs. Also, many facets of the healthcare industry, such as prescription drugs, have proven to be recession-resistant, meaning that people will buy theses treatments even in difficult economic times. Given their resilient nature, healthcare stocks look like a safe bet in 2023 as many economists continue to expect a recession at some point this year. Here are seven healthcare stocks to buy now.

DHR Danaher Corp $257
ABT Abbott Laboratories $107
UNH UnitedHealth $493
HUM Humana $509
LLY Eli Lilly $330
MRNA Moderna $173

Danaher Corp. (DHR)

image of laptop screen displaying danaher (DHR) website

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Brothers Steven and Mitchell Rales like to say that their company, Danaher (NYSE:DHR) makes “essential-but-obscure stuff.” In fact, the Washington, D.C.-based company is focused on life-sciences research and making medical devices and products used by doctors to diagnose illnesses in patients. DHR stock has been a long-term winner for shareholders, having beaten the S&P 500 index by more than 1,200% over the last 20 years.

Now is a good time to take a position in DHR stock as the share price is down 15% over the last six months and is trading at $256 a share. The stock has sunk even though the company’s earnings beat analysts’ average estimates over the last four consecutive quarters.

Investors might also want to buy DHR’s shares before it spins off its environmental and applied solutions unit later this year. The company announced last September that it plans to shed the unit so that it can focus exclusively on its life sciences and diagnostics businesses.


scientist wearing virtual reality headset interacts with futuristic holographic interface showing neurological data

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North Carolina-based IQVIA (NYSE:IQV) is a health-information and clinical-research company. It runs clinical trials and laboratories for other healthcare companies and provides them with analytical-and-data services Today IQVIA employs 88,000 people in more than 100 countries and has a market capitalization of more than $40 billion. IQV stock has been a steady performer over the years, as it has gained 11% this year and is up more than 120% over the last five years.

IQVIA pioneered the concept of virtual clinical trials or decentralized trials (DCTs) during the pandemic, a practice that is expected to continue. The market for such trials has been estimated to be worth $8.3 billion.

Additionally, IQVIA has increased its annual revenue for 12 consecutive years and has improved its net income for three consecutive years. Analysts’ median price target on IQV stock is currently $260.00.

Abbott Laboratories (ABT)

Abbott (ABT) sign with lighting behind letters

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There are plenty of reasons to like Chicago-based Abbott Laboratories (NYSE:ABT). Not only is the company a major producer of medical devices and generic drugs, but it has also increased its quarterly dividend for 51 consecutive years, making it a “Dividend King.” The company’s shares have declined alongside the stock market and have sunk 15% in the past 12 months. But ABT stock is up 77% over the last five years.

A scandal involving contaminated baby formula resulted in a recall, and an ongoing criminal investigation has weighed on ABT stock over the last year. However, there is reason to expect the healthcare company to rebound in 2023.

Specifically, the sales of Abbott Laboratories’ medical devices will climb as Covid-19 restrictions are loosened across China. Plus, the FDA has approved Abbott’s new glucose-monitoring system, called the “FreeStyle Libre 3 system,” for people with diabetes.  The revenue generated by the company’s diabetes devices increased 10% in 2022 and could climb again this year.

UnitedHealth Group (UNH)

The UnitedHealth (UNH) headquarters in Minnetonka, Minnesota.

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Now we come to the world’s largest healthcare insurance company, UnitedHealth Group (NYSE:UNH). The Minnesota-based company employs nearly 400,000 people who collectively serve nearly 150 million people in every U.S. state and 33 countries around the world. UnitedHealth reported 2022 revenue of $324.2 billion, up 13% from 2021. Its earnings per share (EPS) last year climbed 18% year-over-year to $21.18.

UnitedHealth has also hiked its dividend every year since it switched to a quarterly payout in 2010, including a 13.7% increase in 2022 to $1.65 per share.

In March 2022, UNH announced that it would purchase LHC Group for $5.4 billion,  expanding its home-healthcare business. UNH stock is down 6% so far in 2023, but has gained 113% over the last five years. Given the company’s long-term track record, it would be a safe bet to buy this healthcare name on weakness.

Humana (HUM)

A Humana (HUM) office building

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Another major health insurer is Kentucky-based Humana (NYSE:HUM). The third-largest health insurance provider in the U.S., Humana’s stock has held up well despite the market’s volatility in the past year. Over the last 12 months, HUM stock has increased 20%. Through five years, the stock has gained 85%. It also has a reasonable price-earnings ratio of 22 and pays a quarterly dividend of 78 cents a share, which is good for a yield of 0.6%.

Fueled by an aging population and their medical needs, the worldwide health insurance industry’s revenue will increase 7.1% annually to $2.6 trillion by 2028, market researcher Imarc Group forecast. With nearly 25 million plan members and counting, Humana should benefit from the continued growth of its medical, dental, vision, and other health-insurance plans.

The company just reported strong fourth-quarter numbers , as its revenue grew 6.6% year-over-year to $22.4 billion, while its EPS jumped 30.6% YOY to $1.62.

Eli Lilly (LLY)

Eli Lilly and Company World Headquarters. Lilly makes Medicines and Pharmaceuticals XI

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It’s difficult to ignore pharmaceutical company Eli Lilly (NYSE:LLY) because of the potential of its obesity drug, Tirzepatide, which could prove to be a blockbuster medication. Some analysts are going so far as to claim that Tirzepatide could be the biggest-selling drug of all time. While that might be hyperbole at this point, LLY stock is up nearly 40% over the last 12 months, largely on speculation related to its weight-loss medication that the FDA is considering approving.

LLY stock has pulled back about 7% to start the year, and investors might want to buy the dip ahead of  Tirzepatide gaining FDA approval. Also known as Mounjaro, Tirzepatide was approved as a diabetes treatment last May, and the company anticipates that it will be  approved to treat obesity at some point this year.

Considering that more than 40% of the world’s population is overweight or clinically obese, the medication could have an instant market of more than 2 billion people worldwide.

And  Eli Lilly has blockbuster prescription drugs that are generating sales for it now. Specifically, the company sells Prozac that treats depression, Trulicity that is used to manage diabetes, and Cialis for erectile dysfunction. Together, these drugs have enabled its annual sales to reach $30 billion.

Healthcare Stocks to Buy: Moderna (MRNA)

The Moderna (MRNA) logo surrounded by syringes, pills and disposable face masks.

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Boston-based Moderna (NASDAQ:MRNA) is another pharma stock worth considering. The company, which pioneered the development of vaccines using messenger RNA (mRNA) to produce an immune response in people, has had great success with its Covid-19 shot, racking up sales of $18.4 billion in 2022. The company recently forecast minimum Covid-19 vaccine sales of $5 billion for this year, fueled primarily by booster shots given to people around the world.

Questions and concerns linger about Moderna’s drug pipeline and what comes next for the company that was founded in 2010. However, there is reason to be optimistic on this front, as Moderna currently has 44 treatment and vaccine candidates in development, including 21 that are in clinical trials.

Its prescription drug candidates include medications to treat HIV, respiratory diseases, and cancer. Analysts seem most excited about Moderna’s vaccine candidate that is designed to treat both Covid-19 and influenza (seasonal flu) in a single dose.

MRNA stock has  climbed 18% in the past 12 months.

On the date of publication, Joel Baglole held a long position in DHR. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Article printed from InvestorPlace Media, https://investorplace.com/2023/02/7-hot-healthcare-stocks-with-the-potential-to-outperform/.

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