SPECIAL REPORT The Top 7 Stocks for 2024

Investing in the Aging Population: 3 Healthcare Stocks to Watch

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  • Demographics make these three healthcare stocks great buy-and-hold investments.
  • Charles River Laboratories (CRL): This lab tools and services company controls a huge chunk of business related to the FDA drug approval process.
  • Johnson & Johnson (JNJ): The blue-chip healthcare giant has been serving up reliable annual dividend increases for 61 years now.
  • Medtronic (MDT): The medical device company is back on the upswing.
healthcare stocks - Investing in the Aging Population: 3 Healthcare Stocks to Watch

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In 2016, there were 49 million Americans aged 65 or older. Analysts forecast that will grow to 73 million retirement-age Americans in 2030 and an eye-opening 95 million in the year 2060.

Needless to say, America’s aging population will be an investing megatrend in the years to come. Given America’s prosperity, a ton of money will go into healthcare companies that can extend lifespans and give people more quality time in their golden years. These three healthcare stocks, in particular, are set to prosper amid this demographic trend.

Charles River Laboratories (CRL)

The logo for Charles River Laboratories (CRL) displayed on a smartphone with a blue stock chart in the background.
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Charles River Laboratories (NYSE:CRL) is a healthcare tools and services company. It was founded on the business of providing lab animals, like mice, to pharma companies for clinical trials. Today, in addition to lab animals, Charles River carries out contract research services and consulting functions for the healthcare industry.

According to Morningstar’s Rachel Elfman, Charles River was involved in the development of more than 80% of all drugs that received Food and Drug Administration (FDA) approval between 2020 and 2022.

That speaks to the competitive moat around Charles River’s business. Pharma and biotech companies need reliable lab animals and clinical trial assistance to test and validate their drug candidates. As the world gets older, there will be more demand for breakthrough drugs and more spending on biotech research.

This, in turn, will inevitably lead to more revenues for Charles River, with its dominant position in the lab animal segment. Given the downturn in biotech over the past year; however, CRL stock is at a deep discount. Shares are under 19 times forward earnings, far below its recent historical average. Elfman believes Charles River’s fair value is $260 per share versus today’s $200 stock price.

Johnson & Johnson (JNJ)

Negative Press Presents a Buying Opportunity with JNJ Stock
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Johnson & Johnson (NYSE:JNJ) is a pharmaceutical and medical devices giant. Founded way back in 1886, it is one of the longest-running pharma companies in the world today.

Generations of investors have relied on JNJ stock thanks to its clockwork predictability. The firm’s dividend hike this April marked the 61st consecutive year when J&J has increased its dividend payout.

Johnson & Johnson has managed this due to its tremendous internal diversification. The company offers a vast array of products across the pharma and medical device categories. After a recent spin-off of its slower-moving consumer wellness business Kenvue (NYSE:KVUE), a reinvigorated Johnson & Johnson is set for many more years of steady earnings and dividend growth.

Medtronic (MDT)

Medtronic (MDT) sign outside office building representing healthcare stocks
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Medtronic (NYSE:MDT) is another medical device company back on the upswing. The firm has historically been a leader in products for cardiology, and it retains nearly 50% market share in its heart devices business today.

More recently, Medtronic branched out into other fields like spinal devices and products for diabetes and insulin management. That latter category has caused a sell-off in MDT stock in recent times. The rise of the GLP-1 weight loss drugs has caused investors to reflexively dump a whole host of stocks that generate revenues from diabetes management.

However, Medtronic’s actual earnings haven’t shown a meaningful drag from this phenomenon. In fact, the company is reporting solid top-line organic growth and just raised its 2024 guidance. MDT stock is still on sale for just 15 times forward earnings but isn’t likely to stay cheap for long given its improving financial outlook.

On the date of publication, Ian Bezek held a long position in JNJ, KVUE, MDT, and CRL stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.


Article printed from InvestorPlace Media, https://investorplace.com/2023/12/investing-in-the-aging-population-3-healthcare-stocks-to-watch/.

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