The 3 Most Undervalued Healthcare Stocks to Buy in June 2024

  • Boost your portfolio’s wellness with these undervalued healthcare stocks.
  • Novartis (NVS): Novartis’ broad portfolio, including its weigh loss drugs could boost sentiment.
  • Centene (CNC): Centene offers various ‘administrative’ services which could rise amid a relatively robust economy.
  • United Therapeutics (UTHR): United Therapeutics brings compelling biotech solutions to the table.
Undervalued Healthcare Stocks - The 3 Most Undervalued Healthcare Stocks to Buy in June 2024

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When it comes to seeking discounts, investors may do well with undervalued healthcare stocks. Primarily, that’s because with this sector, you’re dealing with a permanently relevant narrative.

To be clear, that’s not to say that all healthcare enterprises are guaranteed to rise higher. However, this ecosystem directly addresses the human condition. By forwarding advanced solutions, society benefits over the long run as does the economy. Essentially, a healthier community is able to be more productive.

And because the sector is so pertinent, there’s less chance of buying a value trap (though that risk is never zero). On this note, below are compelling and undervalued healthcare stocks to consider.

Novartis (NVS)

Novartis (NVS) logo on a corporate building during daylight
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Based in Switzerland, Novartis (NYSE:NVS) falls under the drug manufacturing space of the healthcare ecosystem. Per its public profile, Novartis engages in the research, development, manufacture and marketing of healthcare products. Primarily, it offers prescription medicines in therapeutic areas, such as cardiovascular, renal and metabolic. It also features a robust portfolio in oncology, immunology and other key segments.

Fundamentally, Novartis could be intriguing because it’s working on the next wave of obesity drugs, per Bloomberg. Financially, the company is a strong performer. During the trailing 12 months (TTM), Novartis posted a net income of $15.25 billion, translating to earnings per share of $7.38. On the top line, the drug manufacturer generated sales of $49.92 billion.

For the current fiscal year, analysts are targeting EPS of $7.42, implying a 4.48% lift from last year’s result of $7.10. The top line may reach $50.02 billion, up 7.19% from 2023’s tally of $46.66 billion.

Even with the enthusiasm, shares trade at 14.47X trailing-year earnings. In contrast, the sector median stands at 22.67X. Thus, NVS makes for one of the undervalued healthcare stocks to buy.

Centene (CNC)

Medicine and healthcare concept - team or group of doctors and nurses
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Headquartered in St. Louis, Missouri, Centene (NYSE:CNC) operates in the healthcare plans segment. Per its corporate profile, Centene provides programs and services to underinsured and uninsured families, commercial organizations and military families in the U.S. It provides a broad range of services, from offering health plan coverage (including Medicaid expansion) to special needs assistance. It also operates clinical healthcare and pharmacies.

Thanks to its broad relevancies, there’s a good chance that CNC will rise in the long run. Further, another reason why investors shouldn’t be too worried about its near-term choppiness is the underlying economy. Unemployment is relatively low, which should indirectly benefit Centene.

During the TTM period, the company posted net income of $2.74 billion, translating to EPS of $5.05. Further, revenue landed at $155.52 billion. For the current fiscal year, covering experts anticipate EPS to hit $6.92, up 39.83% from last year’s print of $4.95. Admittedly, the top line is more problematic, with sales possibly dipping 2.2% to $150.62 billion.

However, by 2025, Centene could ring up $156.55 billion in revenue. Given the expanded growth, shares look enticing trading at only 10.47X forward earnings and 0.25X trailing-year revenue. Therefore, it’s one of the undervalued healthcare stocks to consider.

United Therapeutics (UTHR)

In this photo illustration United Therapeutics Corporation (UTHR) logo is seen on a mobile phone screen.
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Hailing from Silver Spring, Maryland, United Therapeutics (NASDAQ:UTHR) falls under the biotechnology sector. According to its profile, United engages in the development and commercialization of products to address unmet medical needs. These conditions stem from chronic and life-threatening diseases. One of the company’s main products is Remodulin, an injection to treat patients with pulmonary arterial hypertension.

In addition, United also specializes in gene therapy, in particular promoting Aurora-GT. This is a product designed to rebuild the blood vessels in the lungs. Financially, the company makes a compelling case for undervalued healthcare stocks to consider. It posted net income of $1.05 billion during the TTM period, translating to EPS of $21.12. On the top line, the company rang up $2.5 billion in sales.

For the current fiscal year, analysts are seeking EPS of $24.79, up 25.16% from last year’s print of $19.81. Revenue may reach $2.79 billion, up nearly 20% from 2023’s haul of $2.33 billion.

Despite the strong performance, UTHR trades for only 12.02X forward earnings and 5.48X trailing-year sales. Both stats rank below their sector median values. However, this unusual discount may not last that long.

On the date of publication, Josh Enomoto 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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.


Article printed from InvestorPlace Media, https://investorplace.com/2024/06/the-3-most-undervalued-healthcare-stocks-to-buy-in-june-2024/.

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