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Healthcare is one of the 11 core industries of the S&P 500. It’s also one of the largest, with an estimated market value of $7.4 billion globally. Given the economic worth, it’s no surprise it’s a competitive space. So it’s important to isolate the gold standard of companies for a portfolio. Here are the best healthcare stocks for creating a well-rounded portfolio right now:
- CVS Health Corporation (CVS)
- UnitedHealth Group Incorporated (UNH)
- Maravai LifeSciences Holdings Inc. (MRVI)
- InMode Ltd. (INMD)
- Johnson and Johnson (JNJ)
- Veeva Systems (VEEV)
Read: 5 Things You Must Do When Your Savings Reach $50,000
1. Best Overall Healthcare Stock for Investment Portfolios: CVS Health Corporation (CVS)
CVS Healthcare leaves no stone unturned. It has nearly 10,000 pharmaceutical stores with prescription drug coverage, clinic locations for taking care of patients, tailored insurance and health plans, and virtual telehealth services. Its stock price has grown almost 10-fold in the past 20 years, and CVS also rewards investors with a 2.25% dividend. CVS’ diversified portfolio of services across healthcare and steady income streams make it a great addition to any portfolio.
Statistics
- Price: $98 per share
- Market Cap: $129 billion
- P/E Ratio: 16
- Revenue Growth: 11% year-over-year
- Dividend Yield: 2.25%
2. Best Performing Healthcare Stock: UnitedHealth Group Incorporated (UNH)
UnitedHealth Group is the largest publicly traded healthcare company based on its market capitalization. It provides medical insurance plans in the U.S. for consumers and businesses — a growing market valued at more than $2 trillion alone. Millions of people, including small and large organizations and consumers of every variety, are serviced by UnitedHealth.
Statistics
- Price: $543 per share
- Market Cap: $508 billion
- P/E Ratio: 26.63
- Revenue Growth: 12% year-over-year
- Dividend Yield: 1.19%
3. Best Small-Cap Healthcare Stock: Maravai LifeSciences Holdings Inc. (MRVI)
Founded in 2014, Maravai LifeSciences researches and develops preventative vaccines, drug therapies and diagnostics for human diseases.
Maravai was a stand-out performer during the COVID-19 pandemic due to its model. In the past two years alone, it has tripled its revenue and earnings. But, despite a return-to-normal world, Maravai has continuously outperformed. It has beaten analysts’ expectations for the last four quarters. Even as the healthcare stock showcases persistent demand for its products and services, Maravai trades at a P/E of just 7.87. Investors appear to be getting a growing company at a steal, but its value as an investment will be determined by its ability to sustain such rapid growth.
Another factor plaguing Maravai’s stock price is its leadership changes. A lawsuit Maravai is facing has created short-term uncertainty as the company awaits an outcome. However, Maravai is confident that the lawsuit will be solved quickly.
Statistics
- Price: $14.73 per share
- Market Cap: $3.75 billion
- P/E Ratio: 7.87
- Revenue Growth: 11% year-over-year
- Dividend Yield: None
4. Best Long-Term Healthcare Stock: InMode Ltd. (INMD)
InMode is a medical devices company specializing in surgical procedures. Its array of product offerings includes face, neck and body contouring along with hair removal and treatment for vascular complications. Not only has InMode doubled its revenue and earnings in recent years but it has also provided updated guidance on its expectations for 2022 year-end. It now expects between $445 million to $450 million in revenue.
With a 95% gross margin on its products and services and double-digit growth during a bear market, InMode appears to be priced attractively right now for long-term investors.
Statistics
- Price: $33.43 per share
- Market Cap: $2.7 billion
- P/E Ratio: 17.50
- Revenue Growth: 30% year-over-year
- Dividend Yield: None
5. Best Dividend Healthcare Stock: Johnson and Johnson (JNJ)
Johnson and Johnson services consumer health and well-being, innovative health technology and pharmaceutical segments. Popular brands under its wing include Janssen, Aveeno, Listerine and Neutrogena.
In September 2022, Johnson and Johnson announced a $5 billion share repurchase which it sees as good value right now. This instills confidence in shareholders, and the company reiterated this point stating the company has “strong cash flow and [its] lowest level of net debt in five years.”
Johnson and Johnson have experienced steady incremental growth over the long term since its introduction to capital markets, and its stock has provided reliable dividend returns for many years.
Statistics
- Price: $171 per share
- Market Cap: $447 billion
- P/E Ratio: 23.84
- Revenue Growth: 3% year-over-year
- Dividend Yield: 2.61%
6. Best SaaS Healthcare Stock: Veeva Systems (VEEV)
Veeva Systems provides software as a service for major healthcare companies. Its lineup of customers includes multi-billion dollar behemoths such as Bristol-Myers Squibb, Ely Lilly and Moderna. Veeva has carved out a niche as an enterprise solution for healthcare providers to manage their data and workflows. Its subscription strategy has also made its products very sticky once companies sign up, contributing to extremely high net margins of around 85%.
Statistics
- Price: $164 per share
- Market Cap: $25 billion
- P/E Ratio: 71.23
- Revenue Growth: 17% year-over-year
- Dividend Yield: None
Final Take
The above selection contains some of the best healthcare stocks held by the world’s largest institutions and some future-relevant companies. If investing in a single stock seems like too much risk is being placed on a single bet, there are ETF options that give exposure to a diverse basket of healthcare stocks.
The Health Care Select Sector SPDR Fund ETF (XLV) along with the iShares U.S. Healthcare ETF (IYH) are among the best choices to diversify the risk associated with investments in healthcare stocks.
FAQ
Here are some common questions investors ask about healthcare stocks.
- Will healthcare stocks do well in 2022?
- As a basic need for most people, healthcare stocks tend to perform well in bear markets or recessionary environments. Although a recession may loom, these services aren’t negotiable for most people. As such, healthcare stocks can add stability to an investment portfolio in hard times.
- Is it good to invest in healthcare?
- Many healthcare stocks are in positive territory this year while major indexes such as the S&P 500 are down. Healthcare stocks not only help investors diversify by sector but they can decrease volatility for portfolios.
- Where can I invest in healthcare?
- Investors can browse individual healthcare stocks or ETFs through their brokerage to get exposure for their investment portfolio.
- What is the best healthcare ETF?
- Health Care Select Sector SPDR Fund ETF (XLV) is one of the largest — by assets under management — and widely held healthcare ETFs.
Information is accurate as of Nov. 4, 2022.
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