Healthcare, one of the largest and most complex sectors, is composed of a broad range of companies that sell medical products and services. The healthcare sector includes companies that sell drugs, medical devices, and insurance, as well as hospitals and healthcare providers. Some of the largest healthcare companies in the world include UnitedHealth Group Inc. (UNH), Pfizer Inc. (PFE), and AbbVie Inc. (ABBV).
The healthcare sector has caught investors’ attention since some of these companies have received regulatory approval for drugs to treat COVID-19 and begun distributing vaccines. Other companies are rushing to develop and win approval for their own COVID-19 drugs while others are supplying products to test for and manage treatments of the virus.
Healthcare stocks, as represented by the Health Care Select Sector SPDR ETF (XLV), an exchange-traded fund (ETF), have outperformed the broader market. Healthcare stocks posted a total return of 13.1% over the past year compared to the Russell 1000’s total return of 9.6%. These market performance figures and the statistics in the value and momentum tables below are as of Feb. 22, 2022. The statistics in the growth table are as of Feb. 23, 2022.
Here are the top three healthcare stocks with the best value, fastest growth, and most momentum.
These are the healthcare stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.
|Best Value Healthcare Stocks|
|Price ($)||Market Capitalization (Market Cap) ($B)||12-Month Trailing P/E Ratio|
|Sage Therapeutics Inc. (SAGE)||34.04||2.0||2.7|
|Bio-Rad Laboratories Inc. (BIO)||582.88||17.5||4.2|
|Walgreens Boots Alliance Inc. (WBA)||45.79||39.5||6.2|
- Sage Therapeutics Inc.: Sage Therapeutics is a biopharmaceutical company that develops novel therapies for people with debilitating brain disorders. The company targets diseases and disorders of the brain within key areas such as depression, neurology, and neuropsychiatry.
- Bio-Rad Laboratories Inc.: Bio-Rad Laboratories develops and manufactures a wide array of products for the life science research and clinical diagnostic markets. Its customers include university and research institutions, hospitals, biotechnology and pharmaceutical companies, and applied laboratories. The company recently announced financial results for Q4 of its 2021 fiscal year (FY), the three-month period ended Dec. 31, 2021. Bio-Rad reported a net loss of $1.6 billion, a significant deterioration from the net income of $839.1 million posted in the year-ago quarter. The company’s net sales fell 7.2% compared to the year-ago quarter. The company said that a decline in COVID-19-related sales clouded the picture of its overall financial results, hiding the fact that it experienced strength in other parts of its business.
- Walgreens Boots Alliance Inc.: Walgreens Boots Alliance is a global integrated healthcare and retail pharmacy company. The company operates drugstores and provides health services as well as health and beauty products. It also operates a digital healthcare platform.
These are the top healthcare stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
|Fastest Growing Healthcare Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Pfizer Inc. (PFE)||46.87||263.1||293.3||104.9|
|Regeneron Pharmaceuticals Inc. (REGN)||608.98||66.1||92.3||104.4|
|Exelixis Inc. (EXEL)||19.42||6.2||222.2||67.1|
Source: YCharts; Pfizer Inc.
- Pfizer Inc.: Pfizer is a global pharmaceutical company focused on advancing wellness, prevention of illnesses, and developing treatments and cures for a range of diseases. Its business is focused on the following key therapeutic areas: internal medicine; oncology; hospital; vaccines, inflammation and immunology; and rare disease. The company announced in early January that the U.S. government has committed to purchasing an additional 10 million treatment courses of its oral therapy for COVID-19, PAXLOVID. The treatment was given emergency use authorization (EUA) for use in adults and pediatric patients 12 years of age and older or weighing at least 88 pounds by the U.S. Food and Drug Administration (FDA) on Dec. 22, 2021. It is the first oral antiviral treatment for COVID-19 to be approved by the FDA.
- Regeneron Pharmaceuticals Inc.: Regeneron Pharmaceuticals is a biotechnology company that develops medicines to treat people with serious diseases, including eye diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, pain, and more. The company announced in early February financial results for Q4 FY 2021, the three-month period ended Dec. 31, 2021. Net income rose 94.0% on revenue growth of 104.4% compared to the year-ago quarter. Revenue growth was largely driven by sales of REGEN-COV, the company’s COVID-19 treatment. The treatment received an EUA from the FDA in November 2020 for treating mild to moderate COVID-19 in adults and pediatric patients 12 years of age or older or weighing at least 88 pounds. On Jan. 24, 2022, the FDA revised its EUA for REGEN-COV to limit its use to only cases where the patient is likely to have been infected with or exposed to a specific variant of COVID-19. The FDA said that data show that REGEN-COV is highly unlikely to be active against the omicron variant.
- Exelixis Inc.: Exelixis is an oncology-focused biotechnology company. It aims to accelerate the discovery, development, and commercialization of medicines for cancers that are considered difficult to treat.
These are the healthcare stocks that had the highest total return over the last 12 months.
|Healthcare Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|McKesson Corp. (MCK)||269.00||40.3||52.5|
|Anthem Inc. (ANTM)||444.01||107.1||52.0|
|CVS Health Corp. (CVS)||101.92||133.8||48.1|
|Health Care Select Sector SPDR ETF (XLV)||N/A||N/A||13.1|
- McKesson Corp.: McKesson is a global healthcare company offering healthcare supply chain management solutions, retail pharmacy, community oncology and specialty care, and healthcare information solutions.
- Anthem Inc.: Anthem is a health benefits company. It offers a variety of network-based managed care plans and managed care services, including claims processing, stop loss insurance, and wellness programs. It also provides dental, vision, life, and disability insurance.
- CVS Health Corp.: CVS Health is an integrated pharmacy healthcare provider. The company provides services including pharmacy benefit management, mail order delivery, and retail sales. It also operates disease management programs and retail clinics. CVS Health announced in early February financial results for Q4 FY 2021, the three-month period ended Dec. 31, 2021. Net income attributable to the company’s shareholders rose 34.2% on revenue growth of 10.1% compared to the year-ago quarter. The company said that it administered more than 32 million COVID-19 tests and more than 59 million COVID-19 vaccines in all of 2021.
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