The COVID-19 pandemic emphasized the importance of healthcare companies. Consistent breakthroughs, improved products and relatively consistent growth make these companies fan-favorite picks for investors. The production of new medicines often is the most important catalyst for these companies; the millions of dollars spent in research and development culminate in regulatory approval. If successful, investors can see their portfolios magically jump in size overnight. If not, the slump can be brutal. This double-sidedness is also why some investors are hesitant to jump into this sector.
However, with a compounded annual growth rate (CAGR) of 8.27%, the sector as a whole is expected to grow, making it a suitable investment. With rapid innovation, the companies discussed today are likely to outpace the market — providing you with handsome returns should you invest.
Abbott Laboratories (ABT)
Abbott Laboratories (NYSE:ABT) is a global healthcare company engaged in the discovery, development, manufacture and sale of a broad and diversified line of healthcare products. These include diagnostic tests, medical devices, nutritional products and branded generic pharmaceuticals.
ABT stock is currently trading at $103.20 and has a market cap of $179.5 billion. The company has positive financials, with profit and operating margins of 14% and 15.4% respectively. The stock has consistently beaten EPS predictions for the past year with an average EPS surprise of 2.43%. Analysts believe that the stock is underpriced right now, and have set a price target of $125.18 for the stock, indicating potential upside of 21%.
Another reason investors might want to go for this stock is its dividend. Abbott currently offers a dividend yielding around 2.13%, which is attractive for income-seeking investors. The company has a strong track record of dividend payments. It has increased its dividend for 29 consecutive years, making it a Dividend Aristocrat.
This commitment to returning value to shareholders makes ABT an appealing option for long-term investors looking for both growth and income. With strong financials, a promising price target and a reliable dividend yield, Abbott Laboratories is the best healthcare stock to buy.
Amgen (AMGN)
Amgen (NASDAQ:AMGN) is a leading biotechnology company that discovers, develops, manufactures and delivers innovative human therapeutics. The company primarily focuses on areas of high unmet medical needs and leverages its expertise in molecular biology and biochemistry to develop therapies that improve patient outcomes.
AMGN stock has seen positive profit and operating margins of 12.74% and 13.33%. The company has seen steady revenue increases over the past four years, rising by 10.8% from $25.42 billion in 2020 to $28.19 billion in 2023. The company has also consistently beaten EPS predictions over the past year by impressive margins.
Amgen, like Abbott Laboratories, has provided investors with good dividends with a yield of 2.89%. Amgen’s entry into the obesity drug market with a promising clinical trial for weight loss has driven a stock surge. It pushed shares near all-time highs. Promising financials, great dividends and recent developments make Amgen one of the best healthcare stocks to buy.
Eli Lilly (LLY)
Eli Lilly (NYSE:LLY) is among the most widely known pharmaceutical companies. It is particularly famous for its insulin, though it does also have other drugs under its umbrella. A notable one is the weight-loss drug Zepbound, which is a direct competitor to Novo Nordisk’s (NYSE:NVO) Ozempic. LLY has a steady stream of products rolling in but certain challenges may limit stock growth potential.
LLY stock has great financials with profit and operating margins of 17.08% and 31.20% respectively. The company has seen a year-on-year quarterly revenue growth of 26% with earnings growth of 66.80% in the same period. An operating cash flow of $3.68 billion further solidifies this.
Recently, LLY’s Alzheimer’s drug was approved. This drug is a testament to the regular innovations done by LLY. However, it didn’t affect the market too much. There is a lot of negative news floating around, particularly regarding the Biden administration’s plans to lower the prices of key drugs. This is understandably worrisome news for investors, though it hasn’t come to fruition yet. Analysts suggest this could be a last-ditch political move.
Investors should focus on the fundamentals of LLY. They are great at the moment and indicate impressive growth potential over the long run. They make it one of the best healthcare stocks to put your money in.
On the date of publication, Achintya Pasricha 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
