There are a whole host of reasons to invest in healthcare stocks over the long term. The United States has an aging population. The number of Americans aged 65 and older is expected to increase by 47% by the year 2050. That will, of course, increase demand for healthcare services.

Technology is also improving the delivery of healthcare and should increase the value of healthcare shares overall. Whether through AI or other innovation, firms at the cutting edge of healthcare innovation tend to grow very quickly. 

Furthermore, healthcare stocks tend to be relatively defensive in nature. People require healthcare regardless of the macroeconomic environment. That inelastic demand results in steady performance across healthcare stocks. Reliable returns create strong internal economics that create wealth for shareholders over time. 

The healthcare sector continues to consolidate, a trend that has existed for several decades. That suggests the larger players are better suited to create a lifetime of wealth for investors.

McKesson (MCK)

McKesson (NYSE:MCK) is a very steady stock choice for investors in what is already a steady sector in healthcare. 

The firm is expected to see a strong increase in earnings this year and steadily grow thereafter in the 10% to 15% range. Meanwhile, revenues are expected to grow on an annual basis at a rate between 8% to 10% over the next several years. 

Steady earnings growth is one of the strongest factors suggesting a company will provide wealth for shareholders. Earnings are essentially everything left over after all bills have been paid. McKesson is strong in that regard. 

The company is also one of the biggest firms in the U.S. healthcare sector. McKesson is a pharmaceutical distributor, healthcare information technology provider, medical supplies distributor and specialty pharmaceuticals firm. The stock has more than quadrupled in price over the past five years. Clearly, it has the ability to create wealth for shareholders and should continue to do so, given its large network and strong position within the U.S. healthcare sector.

HCA Healthcare (HCA)

HCA Healthcare (NYSE:HCA) continues to perform well over the short and long term. The company operates a vast network of healthcare facilities, ranging from hospitals to surgery centers to walk-in clinics and more. 

The company operates the largest for-profit hospital network in the United States. HCA Healthcare phones and operates 188 hospitals and 2,400 healthcare sites overall. Companies such as HCA Healthcare with larger footprints tend to have greater resources to expand. The healthcare sector continues to trend toward consolidation, and larger firms are best positioned to benefit from that.

In the short term, HCA Healthcare is doing well overall. The company recently released its second-quarter results, showing positive earnings and revenue growth. Those strong results allowed the company to raise its guidance for the remainder of the year. Over the long term, investors should expect earnings growth in the 12% to 14% range. The firm’s massive network and strong margins indicate the company has a powerful combination of size and profitability, making it formidable. 

GE Healthcare Technologies (GEHC)

GE Healthcare Technologies (NASDAQ:GEHC) was spun off from its parent company in early 2023. The company chose to concentrate on core industrial businesses, including aviation and power. Now, the healthcare unit producing complex imaging machinery stands alone as a stock. 

Per share earnings are expected to increase by more than 43% in 2024. GE Healthcare has emerged as an AI stock to watch in the healthcare sector. Few other firms are as highly focused on healthcare imaging, providing a real growth opportunity for GE Healthcare to consider.

The company boasted 72 of 850 FDA AI-enabled device authorizations at the end of 2023. That is the highest number of such authorizations among medical device manufacturers. It suggests that GE Healthcare Technologies will not only be at the forefront of AI but also has the potential to create substantial wealth for shareholders. 

There is also a lot of near-term upside in GE Healthcare Technologies shares, given that they are trading near the low target price currently.

Eli Lilly (LLY)

Eli Lilly (NYSE:LLY) has exploded in popularity and price on the commercialization of weight loss drugs Mounjaro and Zepbound. Those GLP-1 agonist drugs are FDA-approved for diabetes and, more recently, for weight loss. 

Earlier this year, Eli Lilly increased its sales guidance for those drugs, prompting an increase to overall 2024 guidance. At the moment, the company is essentially limited by production. It is addressing the production shortfall by investing in four manufacturing sites across the U.S. and Germany. In the future, Eli Lilly will be limited by increased competition from other weight loss drugs seeking commercial approval. 

While some investors may worry that current price levels are unsustainable, there is positive news on that front. Per share earnings are expected to rise above $40 in 2029. At a P/E ratio of 40, well below the current level of 118, shares would trade for $1,623. While future competition and current production limit Eli Lilly to some degree, the overall outlook remains highly positive.

Thermo Fisher Scientific (TMO)

Thermo Fisher Scientific (NYSE:TMO) is a leading firm in the scientific laboratory equipment sector and a steady stock to consider. 

Let’s start by running through some of the forecast numbers and understanding what they mean to shareholders. Shares have a forward P/E ratio of 28. Meanwhile, it is expected that Thermo Fisher Scientific will record $24.57 of earnings per share in 2025. Multiply those two numbers together, and that suggests shares should trade for approximately $688 next year. 

Earnings are expected to rise by approximately $4 in each of the three years following 2025. That means investors should expect share prices to rise by roughly between $75 to $100 in each of those years. That assumes the forward P/E ratio remains at the same value we have today. It could be higher, given the median P/E ratio over the last 10 years was 31.48. That provides reason to believe returns could be even stronger for investors.

Over the long term, that promises to create a lot of wealth for shareholders. 

Intuitive Surgical (ISRG)

Intuitive Surgical (NASDAQ:ISRG) is the leader in robotically assisted surgery and the pioneer of the da Vinci surgical system. That’s the primary reason to invest in the shares and believe in their long-term ability to create shareholder wealth.

The company is coming off a very strong quarter that saw profits and sales exceed guidance. The company attributes the particularly strong period to people having procedures they delayed during the pandemic. That continued increase in demand has resulted in record earnings, pushing the price of the stock to historical highs.

That’s where it gets interesting for investors. All signs point to 20% returns from here for investors, according to my simple calculations. Intuitive Surgical boasts a forward P/E ratio of 70.85. The company is expected to report $7.52 earnings per share in 2025. Multiply those two numbers together and the product is 533. That’s roughly where investors should expect Intuitive Surgical’s shares to trade in the next 12 to 18 months. Fortunately, that is 20% higher than the current share price of $441.

Cigna (CI)

Cigna (NYSE:CI) stock has provided annualized returns of nearly 14% over the last decade. That exceeds the 10.2% annualized returns provided by the S&P 500 over the same period. 

It’s a perfect example of the healthy profits that healthcare stocks provide to investors. Cigna provides health insurance and pharmacy benefits management to its customers. Fortunately for investors, CI stock is expected to rise beyond its current $343 price. The consensus target price stands at $380. There’s room beyond that. 

Cigna should also be attractive to investors looking for wealth because it provides a dividend. The dividend was last reduced in 2005 and has a payout ratio of 0.19. That means 19% of earnings are required to pay for dividends. That’s a very sustainable rate and suggests if management so desires, a dividend hike is entirely possible. The health insurance sector is dominated by a few firms and Cigna is one of them. It should continue to perform well.

On the date of publication, Alex Sirois 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.

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.