2019 has been a fantastic year for the healthcare stock market thus far, as numerous medical stocks soared. Reflecting the market strength, a number of healthcare technology companies enjoy bullish IBD Composite Rating and outperform 95% of all stocks.
Healthcare stock market outlook
Generally traded as a premium market for the past 20 years, the healthcare stock market has many positive aspects. As countries develop and the middle class grows, demand for medical care and pharmaceuticals increases. The growth of the healthcare industry in the near future also seems guaranteed by the aging of the global population.
Flush with cash, the medical sector increases the possibility for high dividend payments. While the enduring demand for healthcare makes investment in the medical community less prone to bubbles or reduced engagement.
The overall strength of healthcare stocks is also supported by innovation by medical device makers. Healthcare technology companies tend to avoid the negative political and cultural stigma attached to pharmaceutical stocks.
Healthcare is one of the few economic sectors in which spending rises faster than inflation. As long as individual healthcare bills keep surging, investors can also benefit from good healthcare stocks.
Best healthcare stocks to invest in
The healthcare market is enormous. According to the Federal Centers for Medicare and Medicaid Services in the US, healthcare spending accounts for 18% of US GDP. Consisting of various industries that generate billions of dollars every year, the healthcare sector includes drug makers, medical device companies, health insurers, hospitals and pharmacies. All of them tend to experience a long–term growth as the population of the US, European and major Asian countries including China, is aging fast.
In a sector with enormous variety, we have selected 5 leading healthcare stocks to watch closely and possibly identify valuable trading opportunities.
|Company name||Market cap||MBusiness area|
|Edwards Lifesciences||$49.6 billion||Heart disease treatment|
|Celgene||$60.4 billion||Haematology, immunology, oncology|
|Illumina||$46 billion||Gene sequencing|
|Intuitive Surgical||$62 billion||Robotic surgical systemsg|
|Vertex Pharmaceuticals||$49.8 billion||Cystic fibrosis drugs|
Edwards Lifesciences ranks 6th in the list of IBD’s 50 elite growth stocks. Since the beginning of the year, the acknowledged leader in producing heart disease treatments, Edward Lifesciences has gained by 56%, justifying the hype and silencing many naysayers. With the exception of one quarter, Edwards earnings have grown by double-digit percentages for several years in a row.
Trade Edwards Lifesciences - EW CFD
The company designs special systems to replace faulty heart valves enabling Transcatheter aortic heart-valve replacement. TAVR is a method which replaces a faulty heart valve without open-heart surgery.
According to Walletinvestor’s live forecast system, Edward Lifesciences stock can be considered a good long-term investment. The latest analysis, offering a 12-month price forecast for EW shares, predicts a 7% increase from the last EW stock price of $238.29 as of November 12, 2019.
There are not many healthcare stocks have guaranteed a double-digit return in 2019. Celgene, however, can. Experiencing strong quarterly revenue and profit growth for years.
According to its Q3 2019 report, Celgene earnings soared 31%, or $2.99 per share. Sales of the biotech giant grew 16% and comprised $4.52 billion. Over the past 5 years Celgene’s earnings have grown 25%.
Celgene is a leading biotech company, specialising in the development of innovative therapies for treatment of cancer, blood diseases and immunological issues. The most important event that can significantly affect Celgene’s stock price is its acquisition by Bristol-Myers Squibb for $74 billion.
Mark Alles, Celgene’s chief executive, heralded its third-quarter results as “outstanding” and expressed the company’s willingness to close the Bristol-Myers Squibb transaction by the end of 2019.
According to GovCapital’s latest Celgene stock price forecast, CELG shares are expected to grow 13.92% after a year from its latest price of $109.68 as of November 12, 2019.
Illumina is a global leader in genomics. The company is engaged in the development and marketing of advanced genetic analysis solutions and life sciences services. Illumina is one of the most important companies that have achieved significant progress in genetic research.
The company's technology helped to cut the cost of mapping a human genome from almost $100 million in 2002 to $1,000 now. Over 90% of genome sequencing was performed with the help of Illumina's systems.
As the use of gene sequencing in screening and cancer treatment research grows, so will Illumina’s stock price. The company is driving growth in key areas, including population genomics – genetic comparisons within particular populations, and consumer genomics – including genealogical research, health and nutrition.
According to CNN Business' 1-year price forecast, Illumina shares enjoy a “buy” rating. The analysts expect ILMN shares to grow 14.85% from its last price of 296.04 on November 12, 2019.
A producer of robotic surgical systems called da Vinci, Intuitive Surgical focuses on delivering better outcomes from surgical procedures and decreasing the costs of healthcare services. In 2018, over 1 million surgical manipulations were performed with the help of da Vinci systems.
Da Vinci robotic systems lower the risks of postoperative complications and make surgical procedures minimally invasive, which aims to cut hospitalisation costs by almost one-third.
Over the past three years Intuitive Surgical has experienced sustainable growth with a compound annual revenue growth rate of 16% and net profit surging 24%. Strong earnings results created substantial optimist around the ISRG price, making it one of the top healthcare stocks to buy.
Another promising biotechnology company, Vertex Pharmaceuticals can be considered a monopolist in delivering treatments for cystic fibrosis (CF). The company has managed to approve three medications – Orkambi, Syndeko and Kalydeco. Together they treat almost half of 75,000 CF patients globally.
Vertex newly developed triple-drug therapies got a long-awaited approval from the US Food and Drug Administration's (FDA) on October 21, 2019. The company expects these therapies to expand their patient’s base to 68,000, which is 90% of the total number of CF patients.
In line with the latest quarter results, Vertex earnings and sales continue to skyrocket with 29% and 25% respectively. Wall Street analysts believe the company will deliver a sustainable earnings growth of over 38% in the next 5 years, which can make it a good long-term investment.
In the end
Although there are significant risks, namely the regulatory hurdles in getting new drugs and devices approved and the extremely competitive environment, healthcare stocks also offer some fantastic opportunities for traders and investors
As unique and revolutionary companies offering outstanding results, Edwards Lifesciences, Celgene, Illumina, Intuitive Surgical and Vertex Pharmaceuticals comprise our top 5 best performing healthcare stocks to watch and invest in.