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Best Healthcare Stocks to Buy In 2021

Author: Jim Mwangi

The healthcare industry is large and diverse enough for almost any investor to build a decent portfolio of the best healthcare stocks. 

Even in the COVID-19-dominated 2020, several healthcare stocks posted robust earnings and decent share price growth. The sector undoubtedly put up a thriving show last year and it is expected to perform better in coming years. Therefore, stock traders putting together a successful, diversified portfolio had better include some healthcare stock. 

Here are the best healthcare stocks right now. 

What Are Healthcare Stocks?

The healthcare sector is highly diversified, but stocks fall into six broad categories: 

  • Biotechnology- companies focused on researching and developing new treatments and devices
  • Insurance- firms that provide medical insurance cover and other healthcare plans
  • Pharmaceuticals- manufacturers of the brand and generic drugs
  • Medical equipment- manufacturers of equipment used in the healthcare settings
  • Facilities- healthcare providers such as hospitals, clinical labs, rehab centers, nursing homes, etc.
  • Sales & distribution- wholesalers, distributors, and retailers of healthcare products

The ubiquity of the sector makes it hard for investors to avoid healthcare companies. This is also an important place to invest because:

  • Of the Standard & Poor 500 (S&P 500), healthcare is the second-largest industry group.
  • Over 10% of the Nasdaq Composite Index comprises health care stocks
  • Five out of the 30 Dow Jones Industrial Average index companies are healthcare-related.

How to Trade and Invest in Healthcare Stocks?

1

Open a free account

First off, you will need to get a broker with reasonable brokerage fees, an excellent trading platform, and accessible markets for you to trade. Once the right broker is found, opening an account will be straightforward.

2

Make a deposit

You will then open an investment account to hold your cash and shares. However, you will be required to deposit some money into the account for you to begin actual trading. Your broker should advise you on the minimum amount you can deposit.

3

Start trading

Based on your research and other inspirations, you can then pick the stocks to buy or sell. Remember to monitor your trades regularly and to institute appropriate risk management.

Where Can I Trade Healthcare Stocks?

Trading healthcare stocks with the right broker will open up your investment opportunities significantly. Conversely, the wrong broker will limit your options and markedly push up the costs of trading.

With all the information out there about different brokerage companies, picking the best broker can be an uphill task. We've shortlisted the best healthcare to buy in 2021 and you can start trading them in our recommended brokers by clicking on the buttons of the following table.

1
Biogen (BIIB)
Our score
10
The US-Based biopharmaceutical is one of the pioneers in neuroscience and therapies for other disorders
Researchers at Biogen might be close to a breakthrough on diseases like Alzheimer and set to get approval from the FDA
Votatile stock but some experts consider it as a good long-term opportunity
Description:
Payment methods
Wire Transfer, Bank Transfer
Full regulations list:
CySEC, FCA
2
Bio-Rad Laboratories (BIO)
Our score
9.3
Founded in 1952
$2.55B revenue in 2020
P/E ratio of 4.7
Description:
Payment methods
Wire Transfer, Bank Transfer
Full regulations list:
CySEC, FCA
3
Teladoc Health (TDOC)
Our score
8.7
Heavyweight in the digital health sector
Steady growth of revenue over the last 5 years
Acquired Livongo in a $18.5B merger in 2020
Description:
Payment methods
Wire Transfer, Bank Transfer
Full regulations list:
CySEC, FCA
4
Intuitive Surgical (ISRG)
Our score
8.5
Founded in 1995
Strong returns over the last 5 years
Heavyweight in the healthcare equipment sector
Description:
Payment methods
Wire Transfer, Bank Transfer
Full regulations list:
CySEC, FCA
5
Vertex Pharmaceuticals (VRTX)
Our score
7.9
Pharmaceuticals company focused on medical research for serious and genetic diseases
The company went public on Nasdaq in 1991
Over the last decade, VRTX stocks have outshined other companies in the biotech sector
Description:
Payment methods
Wire Transfer, Bank Transfer
Full regulations list:
CySEC, FCA

Top 10 Health Stocks to Trade

Covid-19 pandemic worked in favor of a good number of healthcare stocks, driving share growth and increasing their value. 

That momentum is projected to carry over to 2021 for reasons extending beyond the pandemic, such as anticipated growth in the application of diagnostic tools in medicine. 

Stocks from the following companies rank among the best for healthcare stock investors right now. 

  1. Medtronic
  2. CVS Health Corp.
  3. Zoetis Inc.
  4. Teladoc Health, Inc.
  5. Humana Inc.
  6. Vertex Pharmaceuticals
  7. Intuitive Surgical
  8. Biogen Inc.
  9. Bristol-Myers Squibb Co
  10. Pfizer

Medtronic stock (NYSE: MDT)

Medtronic plc. Is a renowned manufacturer and distributor of an extensive portfolio of therapeutic medical devices primarily for managing chronic illness. 

With a market cap of $149,651m and with the worrisome issues brought about by coronavirus receding, Medtronic is projected to experience sizeable post-pandemic growth. The company has also posted better than predicted earnings per share and revenues in its most recent quarters, making it a stock worth considering at the moment.

CVS Health Corp. (NYSE: CVS)

Since 2015, CVS Health has been on a painful journey from a high-flying growth stock to its current status as a value stock. However, in the present world of low prospective returns and high equity multiples, investors may get a more favorable risk/reward from value stocks like CVS.

CVS’s cash flow is still quite strong at over $100billion annually, which has allowed them to pay down their debts. Thus, Covid-19 vaccinations distribution and their optimized debt level give them plenty of runway for buybacks and dividend increases.

Zoetis Inc. (NYSE: ZTS)

Zoetis inc. has been relatively resilient to the covid-19-induced crisis. Movement restrictions and the resultant reliance on companion animals may have been tailwinds for this US-based manufacture of animal medicine and diagnostic products.

Zoetis has close to $80 billion in market capitalization. Its revenue growth, operating income, and margin are favorable for better growth in the FY2021 making Zoetis a favorable stock to trade this year. 

Teladoc Health, Inc. (NYSE:TDOC)

The adoption of virtual healthcare services provision increased considerably with the onset of the Covid-19 pandemic. Consequently, companies like Teladoc Health, Inc., one of the longest-serving virtual health firms in existence, are now on a path of significant growth with no signs of stopping anytime soon.

Teladoc is a leader in the rapidly-expanding field of telehealth. Its shares went up remarkably in the last year, and growth for the company has been both organic and through acquisitions. Telehealth is thus not only a potential growth story beyond the coronavirus pandemic but also a worthy stock to trade.

Humana Inc. (NYSE:HUM)

Humana may have reported some losses per share in its recent quarterly report, but the stock is still something to put on your trading watchlist. Some possible tailwinds for this Louisville-based health insurer include membership growth, as well as Joe Biden’s presidential victory and a proposed lowering of the minimum age at which one is eligible to buy into Medicare.

Vertex Pharmaceuticals (NASDAQ: VRTX)

Vertex is a drug manufacturer whose principal drugs mainly treat cystic fibrosis. One of its biggest sellers is Trikafta, a drug that received U.S. FDA (Food and Drug Administration) approval in late 2019. In its first full-year sales of 2020, the drug garnered around $3.9 million. 

It is expected that in coming years, Trikafta is going to be Vertex Pharmaceuticals’ single biggest revenue driver. Additionally, the company is looking to bolster its pipeline by acquiring more assets. 

Intuitive Surgical (NASDAQ:ISRG)

Over the last half-decade, Intuitive Surgical has more than quadrupled the money of its stock investors. The company has also been setting itself up for steady growth in years to come. 

In the last year, for instance, the firm installed over 900 new surgical systems. And it’s not just machine systems but teams of surgeons trained on how to use the systems. This sustainable competitive advantage makes Intuitive Surgical shares an excellent stock trade this year.

Biogen Inc. (NASDAQ:BIIB)

Insiders have been trading shares in Biogen Inc., which is perfectly legal as long as the company makes such transactions open to the market. 

Insiders are people, including board members who work for a particular company. Even though investors shouldn’t blindly follow insider transactions, paying attention to what insiders are buying and selling might be an indicator of what to expect. 

Some big insider moves for Biogen have been seen in the last year, including share purchases by the company CEO & Director. This indicates that insiders are optimistic about the company, which makes a potential trading opportunity for other investors.

Bristol-Myers Squibb Co (NYSE: BMY)

As most medical service industry players continue to gain momentum post-Covid-19, companies like Bristol-Myers Squibb are reporting accelerated sales. 

Bristol-Myers notably anticipates double-digit growth in earnings over the next couple of years. The growth will be driven by, among other things, its existing drugs and a broad pipeline of new medications.

Pfizer (NYSE:PFE)

Pfizer created a coronavirus vaccine in collaboration with BioNTech (NASDAQ:BNTX), and they estimate to make $15 billion in sales this year. This is a big deal even for such a pharmaceutical giant. 

Besides the coronavirus vaccine, the company has other potential growth catalysts, including a massive budget for research and development, as well as a robust strategy and pipeline. All these make the Pfizer stock a very compelling instrument for investors at the moment. 

Expert Tip on Investing in Healthcare Stocks

A well-balanced, high-quality portfolio that will bring good returns and consistently beat the market ought to include low-risk stocks from companies with healthy profits, strong revenue growth, and lots of cash. Additionally, go for companies that have consistently outperformed the broader financial market year after year.

Why Invest in Healthcare Stocks?

While healthcare may not dominate the stock market like big tech, buying shares in this sector offers real opportunities for long-term value and returns. 

Healthcare costs have, for one, outpaced global inflation rates. Secondly, national health spending is projected to continue rising in the coming years. There’s also a bunch of trends that favor growth, including advances in technology and medicine, expanding aging population, as well as a ballooning burden of chronic illnesses. All these factors, and more, point towards growth and potential generous returns for those who invest in healthcare stocks in the coming years.

Nevertheless, financial trading has some level of risk attached to it. An investor must take active risk management measures for every position they open.

Frequently Asked Questions

  1. Every stock in the healthcare sector offers an opportunity for returns but, at the same time, has a set of risks unique to it. Therefore, don’t lose yourself trying to pick a single number one stock right now. Rather, carefully analyze the available stocks and create a portfolio in line with your investment goals.

  2. Humans need healthcare. The demand for health services is typically going to remain unchanged for the foreseeable future. As such, building a well-curated portfolio of healthcare stocks is an excellent move for any investor right now.

  3. Every industry, firm, or player in the health sector will have a varying degree of performance and volatility depending on such factors like demographics, reimbursement patterns, technological breakthroughs, and government regulations, among other things. An investor should thus not be hard-pressed to find the single most impressive performer. Instead, it’s best to attempt to put together a diversified stock portfolio of healthcare companies with potentially promising performance.

  4. Anyone with knowledge of how to trade in the stock market can invest in healthcare stocks. However, you must recognize the risk of financial trading and be ready to take it on.

  5. A popular saying goes, “Invest in what you know.” Healthcare shares are thus a fitting place for a beginner to start because companies in this sector are easy to identify, recognize and analyze.

  6. The vast healthcare sector offers investors a wide array of companies, big and small, to choose and invest in.

  7. Most brokers provided extended trading hours on their platforms, which allow investors to trade for 24 hours, Monday to Friday, on popular stock exchanges around the globe.