The healthcare sector regularly has more than $2.6 trillion invested in it annually, according to Statista. Given that the Bureau of Economic Analysis stated the nation’s overall GDP was $20.93 trillion in 2020, this equates to over a tenth of America’s entire GDP. To put that into context, one buck in every ten dollars generated by the economy is invested back into healthcare.
The healthcare industry has had even greater exposure in the last two years due to the ongoing Covid-19 pandemic. The sector, which includes some of the largest North American health insurers, healthcare providers, hospitals, and drugs manufacturers, has faced many economic tailwinds in recent times and underperformed in 2021 against the S&P 500. However, hope abounds for many healthcare stocks in 2022, with several undervalued equities providing investment opportunities for many.
Many will consider investing within their 401(k) to be tax-efficient and maximize any potential profits they could make. Even those based overseas can invest in America’s leading healthcare stocks as part of their long-term savings strategy. For instance, those in the UK can get access to thousands of publicly listed stocks stateside. A quick glance at Freetrade ISA fees shows that British investors can pay the currency exchange spot rate plus a fee of just 0.45% to access overseas shares like those listed on the New York Stock Exchange or Nasdaq, many of which will be ISA-eligible meaning they can benefit from being within a tax-efficient product.
As with investing in any other pioneering industry, generating profit from your healthcare investments requires calculated decision-making to take the right equity at the right time. As we embark on another year, let’s look at some of the US healthcare stocks that could offer significant opportunities over the coming months.
With a market value of almost $423 billion, UnitedHealth Group is one of the leading healthcare providers. Ranked eighth in the Fortune Global 500, it’s up there with the likes of Apple as the most formidable company in terms of total annual revenues. One of the most fascinating aspects of this corporation is its new and innovative healthcare plans. NavigateNOW is a virtual healthcare product, designed to be made available to employers and their staff across nine core markets. With cash flow hitting $7.6bn – some 180% of its net income – this is a rock-solid starting point for any healthcare investor.
At the cutting edge of the biotech subsector, Vertex Pharmaceuticals is right at the forefront. It continues to test and develop new drugs and treatments to tackle the underlying genetic cause of the lung disease cystic fibrosis. Its latest treatment, known as Trikafta, could help 50% more sufferers nationwide. It’s also focused on harnessing new drugs for other rare and common diseases, most notably Type 1 diabetes.
Pfizer Inc. is one of the biggest pharmaceutical institutions. With a heritage in our healthcare industry dating back as far as 1849, it’s certainly one of the most liquid equities to buy and sell on the stock market. It shot to prominence more recently for its collaboration with BioNTech on the first Covid-19 vaccine to receive FDA approval. With booster jabs expected to be par for the course for some time – and kids under 5 soon to become vaccine eligible – it’s likely to drive significant revenue for the company in the coming years. Pfizer’s got many other strings to its bow too, such as its Ibrance breast cancer treatment that generated $5.4 billion in revenue in 2020. Its quarterly cash dividend for Q1 2022 was also recently raised to $0.40 per share.
CVS Health Corp
You will probably be familiar with the CVS Health Corp. The corporation boasts almost 10,000 pharmacies across the US, with over 300,000 employees on its payroll. Ahead of its latest quarterly results, analysts anticipated $2.06 earnings per share, but it eventually weighed in at a hugely impressive $2.42 per share. Cash flow is expected to be more than $12 billion for the full year. As the firm evolves into a full-service healthcare provider, it’s clear this is an equity with immense longevity.
Johnson & Johnson
Johnson & Johnson has long been synonymous with products such as baby powder and shampoo, but more recently its biotech credentials have come to the fore. The Food and Drug Administration has approved treatments and therapeutics from Johnson & Johnson to tackle no less than 20 diseases, including Alzheimer’s disease and cancer. Its Covid-19 vaccine has also proven a global winner, as has its plaque psoriasis and psoriatic arthritis drug Stalera, which yielded $1.5 billion in sales in 2020.
Although all of the above healthcare stocks are likely to experience ongoing headwinds because of the Covid-19 pandemic, these five equities have the fundamentals to weather the storm and come out the other side for their shareholders.