Healthcare stocks often make good long-term investments. After all, the U.S. healthcare industry is worth more than $700 billion annually and growing at a brisk clip, especially with an aging population and global health events such as the COVID-19 pandemic. Whether it is a health insurance company, a drug maker, or a medical device manufacturer, the healthcare landscape is rich and diverse, full of an array of different stocks to choose from. This has led to the rise of healthcare stocks for a market crash.
Other reasons to like healthcare stocks are long-duration patents that can protect sales and profits, strong dividend payments to stockholders, and pricing power. Given the essential nature of healthcare, the sector is also more immune than most to economic downturns and market crashes.
Here are three healthcare stocks to buy for a soft landing.
UnitedHealth Group (UNH)
There’s a nice buy-the-dip opportunity in UnitedHealth Group (NYSE:UNH) right now. The largest health insurer in the U.S. has seen its stock decline 5% this year. Trading at 22 times future earnings and with a quarterly dividend payment of $1.88 per share (1.53% yield), there are a lot of reasons to like UNH stock. Plus, companies and individuals prioritize paying their health insurance premiums in any type of economy, making UnitedHealth Group largely immune to economic downturns.
UNH stock is lower this year largely due to concerns about a spike in medical costs, which could eat into profits. However, UnitedHealth Group largely dispelled those concerns with its recent Q2 print.
The insurer beat Wall Street expectations on both the top and bottom lines and said that it is seeing a surge in demand for non-urgent surgeries and outpatient services that were placed on hold during the pandemic. UnitedHealth Group also lifted its full-year earnings guidance to $24.70 to $25.00 a share, up from $24.50 to $25.00 previously. This makes it one of those healthcare stocks for a market crash to consider.
Winter is coming and with it an expected resurgence of Covid-19. Enter drug maker Pfizer (NYSE:PFE). The Centers for Disease Control and Prevention recently said that it expects an updated COVID-19 vaccine from Pfizer to be available to the public by mid-September, providing a potential catalyst for the pharmaceutical company and its stock. A boost in sales of its COVID-19 treatments cannot come soon enough at Pfizer, whose share price is down 30% this year and currently trading near a 52-week low. All in all, it’s one of those top healthcare stocks for a market crash.
PFE stock has been hurt by a dramatic downturn in sales of its Covid-19 vaccine and Covid-19 antiviral pill called Paxlovid. The company reported that its revenue in Q2 of this year decreased 54% from a year earlier due to waning COVID-19 vaccine sales.
The company continues to trumpet its pipeline of new medications that include treatments for urinary tract infections, Lupus, and heart disease. However, a more immediate uptick in sales of its COVID-19 vaccine this fall and winter could prove to be the shot in the arm that this stock needs.
Medical device manufacturer Medtronic (NYSE:MDT) is another stock that looks ready for a reversal of fortune. Down 15% over the last five years, MDT stock looks poised to recover after the company issued strong Q2 financial results and hiked its annual earnings forecast. Like UnitedHealth, Medtronic says it is seeing a rise in non-urgent surgeries coming out of the Covid-19 pandemic. As a result, the company, which makes pacemakers and catheters, is seeing robust sales, particularly for devices used in heart and gastrointestinal procedures.
Sales of Medtronic’s heart devices unit, its biggest revenue driver, increased 5.50% in the latest quarter to $2.85 billion, which was above analysts’ estimates of $2.78 billion. That helped to drive total revenue up 4.50% to $7.70 billion, topping Wall Street consensus estimate of $7.57 billion. Looking ahead, Medtronic said it now expects its full-year profit to be between $5.08 and $5.16 a share, up from a previous range of $5 to $5.10. MDT stock also offers a quarterly dividend that yields 3.36%.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.