If you look at the most important businesses of our time, it’s clear that no sector deserves more consideration than healthcare. These companies are working to improve the core of our existence by remediating physical ailments, diseases, and mental illnesses.
Understanding the Healthcare Sector
According to the Global Industry Classification Standard (GICS), the healthcare sector comprises two primary industry groups:
● Healthcare equipment and services, including healthcare equipment and supplies, service providers, and technology
● Pharmaceuticals, biotechnology, and life sciences tools and services
Best Healthcare Stocks to Buy
There are thousands of interesting healthcare stocks investors can choose from. But here are five healthcare stocks that I believe offer the perfect prescription for long-term gains:
Veeva Systems (NYSE: VEEV)
Veeva Systems (VEEV) – Get Free Report provides cloud-based software solutions for the life sciences and pharmaceutical industries. Veeva has made itself virtually indispensable to these complex, highly regulated businesses by creating industry-specific cloud solutions that suit their needs in ways that more widely adopted cloud platforms cannot. This is also why Veeva has struck partnerships with third-party companies, including Salesforce, Amazon Web Services, and Zoom Video Communications. As a result, Veeva Systems has more than tripled its revenue over the past five years, rewarding investors with commensurate returns over the same period.
HCA Healthcare (NYSE: HCA)
As the owner and operator of 182 hospitals and roughly 2,300 sites for ambulatory care (including surgery centers, free-standing emergency rooms, urgent care centers, and physician clinics), HCA Healthcare (HCA) – Get Free Report stands tall as one of the United States’ largest hospital systems. Investors can feel good owning shares given its stated mission of staying “committed to the care and improvement of human life” above all else. Shares have faced pressure in recent weeks as management shied away from providing early guidance for 2023 in light of inflation headwinds. But I believe HCA is a best-of-breed stock in the hospital space that is worth buying and holding for the long term.
Teladoc Health (NYSE: TDOC)
Teladoc (TDOC) – Get Free Report describes itself as the “world leader in whole-person virtual care” because its industry-leading telehealth platform enables users to receive everything from primary care to mental health and chronic condition management. By making virtual care the “first step in any healthcare journey,” Teladoc says, it can provide a more personalized, unified consumer experience and extend the reach of care providers without sacrificing quality of care. Teladoc shares have been hammered more than 90% from last year’s highs as a result of a slowdown in growth rates as the pandemic waned. So now might be an excellent opportunity to open or add to a position for investors with a patient, long-term mindset.
Intuitive Surgical (NASDAQ: ISRG)
Intuitive Surgical (ISRG) – Get Free Report is a pioneer in robotically assisted, minimally invasive surgery. To date, surgeons have performed more than 10 million procedures worldwide using Intuitive Surgical’s da Vinci systems. Intuitive uses a razor-and-blades model to drive its top line, generating revenue through the initial sale of robotic surgery systems and through recurrent sales of replaceable instruments and accessories. Currently, robotically assisted surgeries only account for slightly more than 3% of all procedures using legacy robotic systems, leaving Intuitive with a long runway for growth in the coming years.
Align Technology (NASDAQ: ALGN)
More than 14 million patients have embraced the flagship Invisalign orthodontics devices from Align Technology (ALGN) – Get Free Report — a far superior option to traditional braces. But as it works to penetrate a base of around two million doctors with one of its iTero intraoral scanners in every chair, Align believes its total available market can expand to roughly 500 million patients.
Advantages of Investing in Healthcare Stocks
Many healthcare stocks are largely insulated from broader macroeconomic cycles, with products, platforms, and solutions that the public consistently wants or needs regardless of economic circumstances. You can also feel good as an investor knowing the healthcare stocks you own strive to fundamentally improve one of the most crucial aspects of people’s lives.
The healthcare sector offers a variety of businesses with vastly different market capitalizations and risk profiles. From large, mature companies with steady revenue streams and dividend payouts to small, innovative upstarts looking to disrupt or create an industry, there’s truly something for everyone looking to put money to work in this sector.
Risks of Investing in Healthcare Stocks
Healthcare stocks operate in highly regulated industries, requiring them to navigate rigorous government licensing, clinical trials, and approval processes before they generate revenue. As a result, many healthcare stocks can be extraordinarily volatile, with returns driven by infrequent de-risking events, particularly in their earliest development stages.
However, regulations can also be a strong barrier to entry for newer market players. Up-and-coming healthcare innovators looking to disrupt entrenched leaders often find it difficult to change previously established, widely adopted practices in their respective industries.
The Bottom Line
Whether you’re looking for stable industry leaders or disruptive startups with massive growth potential, the healthcare sector provides plenty of choices to put your investment dollars to work. By placing calculated bets on the best healthcare stocks the market has to offer that also suit your risk tolerance and investing goals, you stand a good chance of achieving market-beating gains.