As investors, we are often looking to diversify our portfolios. Especially with the wild AI craze in the past year, many investors already hold positions in AI or other technology companies. Adding a variety of stocks from different sectors in your portfolio can help reduce risk. It lessens your dependence on returns in one sector. Diversification with the top healthcare stocks to buy can help spread out your risk in case any one sector collapses.

Although healthcare stocks aren’t discussed as much right now, they’re great ones to consider adding. Many are sitting in the “sweet spot.” This is because it’s a perfect time to buy. After all, they have a great valuation compared to competitors, a new development set to expand revenue or a combination of both. As such, we will highlight three healthcare stocks positioned at a great time to buy. 

Johnson & Johnson (JNJ)

Johnson & Johnson (NYSE:JNJ) is one of the largest global healthcare innovation companies focused on pharmaceutical technology and “MedTech.” With its recent Q4 FY2023 earnings exceeding expectations and reaffirming FY24 guidance, it’s no wonder that 21 Yahoo Finance analysts are projecting an optimistic one-year price target between an average of $174.76 and a high of $215!

Recently, the JNJ’s bladder cancer drug Balversa gained full FDA authorization. According to Kiran Patel of J&J Innovative Medicine, this approval underscores the “promise of targeted therapy in treating advanced bladder cancer.” This approval coincidentally followed J&J’s announcement of a $2 billion acquisition of Ambrx Biopharm. This antibody drug conjugates specialist helps JNJ enhance revenue growth and help mitigate the risk of product dependency on Balversa.

Taking a quick glance at JNJ’s financials, we see that its past year’s dip in sales has leveled out its P/E valuation to be a slightly undervalued 15.29x compared to the sector median of 18.68x. With JNJ’s increasingly diversified portfolio and plans to continue forwarding investments into R&D, this giant pharmaceutical company is positioned in a sweet spot, ready for any investor to scoop up. 

UnitedHealth Group (UNH)

UnitedHealth Group (NYSE:UNH) is a well-established company offering various healthcare services. These include providing medical insurance plans, running clinics and hospitals and offering wellness programs. The stock is up over 3% in the past year, but Yahoo Finance analysts have an average 1-year price target of $552.22, far above the current share price of around $503.00. 

The stock took a dive post earnings recently, but this is likely an overreaction. The company reported revenue of $371.6 billion, a growth of over 15% yearly. This growth is seen across both Optum and UnitedHealthcare segments. These earnings are expected to grow around 7% for the next few years. This should be an encouraging sign for investors that the company is persistently improving its earnings potential. Its forward P/E ratio of 19.40x, over 33% lower than the sector median, provides investors a perfect opportunity to scoop up some shares. 

Acumen Pharmaceuticals (ABOS)

Acumen Pharmaceuticals (NASDAQ:ABOS) is a biopharmaceutical company that focuses on developing therapies for the treatment of Alzheimer’s disease. Although the stock is down over 35% in the past year, this presents buyers with a great opportunity. Yahoo Finance analysts have an average 1-year price target of $14, far above the current price of around $3.42. 

Currently in the pipeline, the company has a drug called ACU193. This drug is the first of its kind with its unique mechanism of preventing AβOs from binding to dendritic spinesin, thus preventing the development of Alzheimer’s. Although it is currently in Phase 1, Acumen has received a $3.6 million grant to continue this research going forward, which points to this company’s promising and innovative nature. 

Looking at its valuation, the company has a Price/Book ratio of 0.67x. This is over 70% below the sector median of 2.25x, indicating the company’s relative undervaluation compared to its peers. 

On the date of publication, Ian Hartana and Vayun Chugh did not hold (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.