3 Healthcare Stocks to Buy Now: Q2 Edition


  • Between Medicare, Medicaid, enterprise and private insurance, the healthcare industry is lush with investing opportunities.
  • Elevance (ELV): A growing regional power, Elevance’s rebrand and quality are helping it win government subsidies.
  • Centene (CNC): A dominant force in Medicaid provision, Centene’s service expansion bodes well for future profits.
  • Cigna (CI): Divestiture and renewed focus are helping Cigna plot a lucrative trajectory.
Healthcare Stocks to Buy Now - 3 Healthcare Stocks to Buy Now: Q2 Edition

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Over the years, the healthcare industry in the United States has morphed into a complex web of insurance companies, hospital corporations and medical providers. Since the 2020 Coronavirus pandemic, U.S. healthcare spending and government subsidization have ballooned to nearly double pre-pandemic levels. Despite this involvement of taxpayer dollars, approximately 100 million Americans are burdened by some level of medical debt. This has resulted in a difficult medical system for consumers, but an advantageous one for health providers, leading to some of the best healthcare stocks to buy now.

Today, healthcare conglomerates represent some of the most profitable businesses in the United States. For example, in 2022 alone, the four largest U.S. insurance companies made an eye-watering $41 billion in combined profits. This trend has led to companies with objectively strong financials, despite the strain it puts on the average American’s taxes and salaries.

So, for investors looking to profit from America’s complex healthcare system, here are three healthcare stocks to buy now.

Elevance (ELV)

An image of two medical professionals performing a procedure on a patient
Source: Roman Zaiets / Shutterstock.com

A middle-of-the-pack option in size and significance, Elevance (NYSE:ELV) has worked consistently to streamline its business model. Known as Anthem and Blue Cross Blue Shield before rebranding for simplicity, Elevance’s reputation has kickstarted its regional growth. One aspect of the American health system many investors may not be aware of is how private insurance companies play into Medicaid provisions.

When a state offers Medicaid to residents, it does so through state and federal taxes allocated to private insurance companies. This means insurance companies collect money from the customer both in the form of premiums and taxes. By leveraging this aspect of the healthcare system, Elevance has successfully secured a Medicaid contract to become one of Florida’s top three providers.

Considering that Florida is the third most populous state in the U.S. with nearly 5.8 million beneficiaries of Medicaid, Elevance has generous room to grow.

Analysts are also very bullish on ELV’s prospects, as its EPS is set to surge 48% this year. This forecast makes ELV one of those healthcare stocks to buy.

Centene (CNC)

a photo of a stethoscope laying atop medical papers
Source: Shutterstock

As the largest Medicaid-managed care organization in the U.S., Centene (NYSE:CNC) has positioned itself for profit regardless of the economy. CNC has become a leading Medicaid provider in California, Florida, New York and Texas, four of the largest Medicaid states. This means the company is insulated from regional economic trends and directly benefits from times of hardship.

That’s because Medicaid usage spikes when people lose their jobs and thus medical benefits or cannot afford private health insurance. On one hand, Centene’s long-term care management services improve patient outcomes for those less financially fortunate. Yet, on the other hand, they strain government tax allocations in times of economic struggle.

Moreover, the company just expanded its Medicaid contract provisions to Michigan, which also constitutes one of the larger state economies in America. Thus, CNC could be one of those healthcare stocks to buy now, before a potential economic downturn.

Healthcare stocks are generally considered more defensive and less cyclical than other types of investments, such as growth stocks. This gives them their defensive qualities.

Cigna (CI)

Cigna logo displayed on a modern smartphone. CI stock.
Source: Piotr Swat / Shutterstock

Medicare specialization might not be for every healthcare company, as Cigna (NYSE:CI) recently divested its Medicare Advantage section. Considering the lucrative nature of government subsidization, this may seem like a mistake for Cigna. However, the company is relentless in the pursuit of profits, and its unprofitable Medicare venture was bound to be sold.

Since its Medicare divestiture, Cigna has refocused efforts on its primary target market to individuals capable of affording premium insurance. With this move, the company raised its annual adjusted earnings per share growth target to 10%-14% for 2024. A big part of this growth prediction comes from the innovative solutions the company intends to introduce this year.

From expedited pharmacy scripting to simplified behavioral care services, Cigna’s Evernorth portfolio could help attract even more customers. Furthermore, Cigna has continuously flourished since 1984 by maintaining stability through careful service and care management.

On the date of publication, Viktor Zarev 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.

Viktor Zarev is a scientist, researcher, and writer specializing in explaining the complex world of technology stocks through dedication to accuracy and understanding.

Article printed from InvestorPlace Media, https://investorplace.com/2024/04/3-healthcare-stocks-to-buy-now-q2-edition/.

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