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15 Best Medical Stocks to Invest In

·14 min read
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In this article we will take a look at the 15 best medical stocks to invest in. You can skip our detailed analysis of these companies, and go directly to the 5 Best Medical Stocks to Invest In.

The healthcare sector is set to grow in the coming years, as aging population, demand for life-saving medicines and R&D spending increase. According to a report published by Deloitte, healthcare spending is likely to increase at a CAGR of 3.9% between 2020 and 2024.

The healthcare sector remained strong in 2020 with the Russell 3000 Healthcare Index showing 19.3% growth. The coronavirus crisis fueled digital innovation in the sector. According to Deloitte, 65% of EU doctors have reported a shift toward digital innovation in their respective organizations. Medical companies, such as CVS Health Corporation (NYSE: CVS) and Teladoc Health, Inc. (NYSE: TDOC) provided 24/7 virtual consultation to their patients around the globe. Telemedicine company Teladoc Health, Inc. (NYSE: TDOC) reports over 20,000 virtual visits on their busiest day. McKinsey & Company also reported that around 80% of consultations took place through phone or web. 

According to McKinsey, over $80 billion have been spent by institutional investors in healthcare technologies in the last five years. The use of connected health devices and 5G enabled equipment have also gained popularity in the past years. 28% of China's population regularly uses connected health devices. The use of AI is also crucial in this regard. Medtronic plc (NYSE: MDT) has made waves in the medical industry by performing the very first robotic-assisted surgery (RAS) on a patient in Chile.

With the robust Covid-19 vaccination process across the world, vaccine manufacturers are gaining the attention of investors. In the last six months, the CVS stock has gained by 23% considering the fact that CVS Health Corporation (NYSE: CVS) carried out vaccinations of over 6.5 million people through April 2021. The diagnostic centers also remained on the top list of the investors because of the millions of tests carried out on a daily basis. Becton, Dickinson and Company (NYSE: BDX) earned over $480 million from its diagnostic revenues, especially pertaining to Covid-19 testing. 

In Q1 2021, Pfizer Inc. (NYSE: PFE) was able to generate $3.5 billion in revenue through vaccines. Similarly, earlier in April, Johnson & Johnson (NYSE: JNJ) reported the sales of vaccine shots worth $100 million. The biopharmaceutical company, Sanofi (NASDAQ: SNY) has also stepped into the vaccination strategy and has delivered vaccines worth 915 million euros in Q1.

15 Best Medical Stocks to Invest In
15 Best Medical Stocks to Invest In

            

Chaikom/Shutterstock.com

Keeping this framework in mind, we have curated a list of the 15 best medical stocks to invest in. We took into account hedge fund sentiment, analysts' comments, fundamentals and future growth catalysts while choosing these stocks.

Best Medical Stocks to Invest In

15. Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX)

Market Cap: $50.3 billion Number of Hedge Fund Holders: 11

Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) is a biotechnology and biopharmaceutical company that manufactures and markets diagnostic medicines across the globe. The company was founded in 1989 and has headquarters in Boston, Massachusetts. It ranks fifteenth on our list of the best medical stocks to invest in. 

In Q1 2021, Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) generated over $1.7 billion in revenue, up from $1.52 billion during the same period last year. The EPS for the quarter stood at $2.98, beating the market estimate of $2.69. Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) has recently announced a share repurchase program, worth $1.5 billion. The VRTX stock has gained 121.5% in the past five years. Earlier in June, Piper Sandler raised the price target on the stock to $261, indicating a 36% upside potential, and has ranked the stock as a ‘Buy’. 

At the end of Q1 2021, 11 hedge funds tracked by Insider Monkey have stakes in Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX), worth $40.9 million. 

ClearBridge Investments has released its first-quarter 2021 investor letter and mentioned Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX) in it. Here is what the firm has to say: 

“While equity participation has been broadening, not all sectors and industries have benefited. Health care, which represents the Strategy’s second largest overweight, has lagged in recent months but we believe positive vaccine development and upcoming clinical news for other therapeutics will eventually lead to greater recognition by investors. Vertex Pharmaceuticals continues to expand its cystic fibrosis franchise globally while advancing multiple underappreciated pipeline assets.”

14. Sanofi (NASDAQ: SNY)

Market Cap: $132 billion Number of Hedge Fund Holders: 15

Sanofi (NASDAQ: SNY) is a Paris-based biopharmaceutical company, which produces vaccines, prescription medicines, and healthcare products. Today, the company has operations in 100 countries worldwide and a team of over 100,000 employees. 

In Q1 2021, Sanofi (NASDAQ: SNY) generated $8.8 billion in revenue, with $0.73 EPS, beating the market estimate of $0.69. The SNY stock has also soared by 8.5% year to date and 10.3% in the past six months. Sanofi (NASDAQ: SNY) vaccines have proven out to be efficient against lung cancer and dengue. Recently, the European Commission has approved the company’s PD-1 inhibitor Libtayo for the initial lung cancer stage, along with three advanced cancers in the EU. Similarly, CDC has also approved its dengue vaccine for children in the U.S. 

At the end of Q1 2021, 15 hedge funds tracked by Insider Monkey have positions in Sanofi (NASDAQ: SNY), worth $1.1 billion. 

Like AbbVie Inc. (NYSE: ABBV), Novavax, Inc. (NASDAQ: NVAX), Vertex Pharmaceuticals Incorporated (NASDAQ: VRTX), and Medtronic plc (NYSE: MDT), Sanofi (NASDAQ: SNY) is one of the best medical stocks to invest in.

13. Novavax, Inc. (NASDAQ: NVAX)

Market Cap: $14 billion Number of Hedge Fund Holders: 38

Novavax, Inc. (NASDAQ: NVAX) is a biotechnology company that mainly manufactures vaccines for life-threatening diseases. Along with developing one of the most reliable vaccines for countering Covid-19, the company had developed vaccines for influenza, respiratory virus, Ebola, etc. It ranks thirteenth on our list of the best medical stocks to invest in. 

In Q1 2021, Novavax, Inc. (NASDAQ: NVAX) generated over $447 million in revenues, up from $3.3 million during the same period last year, showing a drastic growth of 13,143%. The NVAX stock’s share price has also grown significantly due to its Covid-19 vaccine reported efficacy of 90%. The stock has gained 145% in the past year and 67% year to date, and saw a hike in February 2021, reaching $290. B.Riley Financial, earlier in June, raised the price target on the NVAX stock to $286, rating it as a ‘Buy’. Moreover, Cantor Fitzgerald raised the price target on the stock to $272 because of its successful phase 3 vaccine trials in the U.S. and Mexico. 

At the end of Q1 2021, 38 hedge funds tracked by Insider Monkey have stakes in Novavax, Inc. (NASDAQ: NVAX), up from 37 in the previous quarter. 

12. Teladoc Health, Inc. (NYSE: TDOC)

Market Cap: $25.5 billion Number of Hedge Fund Holders: 42

Teladoc Health, Inc. (NYSE: TDOC) stands twelfth on our list of the best medical stocks to invest in. It is a New York-based telemedicine company that offers virtual care services to consumers, using innovative technology options. 

In Q1 2021, Teladoc Health, Inc. (NYSE: TDOC) reported solid earnings with 151% year-over-year growth. The revenue stood at $454 million, up from $180.7 million during the same period last year. The U.S. accounted for $416 million of the revenue, while international clients made $38 million. The TDOC stock has also gained over 11.3% in the past month. However, the stock stumbled for a while when the e-commerce giant, Amazon.com, Inc (NASDAQ: AMZN) announced to expand Amazon Care with special attention to telehealth services. However, the analysts are positive about the long-term profits of the company. Earlier in May, Credit Suisse rated the stock as 'Outperform' and raised the price target to $264. 

As of Q1 2021, 41 hedge funds tracked by Insider Monkey have positions in Teladoc Health, Inc. (NYSE: TDOC), worth $3.3 billion.  

ClearBridge Investments have mentioned Teladoc Health, Inc. (NYSE: TDOC) in its recently published Q1 2021 investor letter. Here is what the firm has to say about the company: 

“Teladoc is a leading play on telemedicine, a hyper growth market with significant opportunity for increases in utilization accelerated by the COVID19 environment. The company is well-positioned for this evolution in treatment after years of work building out its network of doctors and payors. Its recent merger with Livongo expands the company’s customer base and increases the number of products to cross-sell such as holistic, chronic disease and second opinion services. International expansion is another significant opportunity.”

11. CVS Health Corporation (NYSE: CVS)

Market Cap: $110 billion Number of Hedge Fund Holders: 62

CVS Health Corporation (NYSE: CVS) is an American pharmaceutical and healthcare company that provides services in providing medicines, health, and wellness, and also offers virtual care services to its consumers. The company has been operational for the past 50 years. 

In Q1 2021, CVS Health Corporation (NYSE: CVS) reported a revenue of over $69 billion, up from $66 billion during the same period last year. The EPS stood at $2.04, beating the market estimate of $1.71. Due to its efficient vaccination process, CVS Health Corporation (NYSE: CVS) saw a 2% increase in its store sales, which are offering vaccines. The CVS stock price has grown by 31% in the past year and 23.4% in the past six months. Earlier in May 2021, Barclays raised the price target on CVS stock from $92 to $100, rating the stock as ‘Overweight’. 

At the end of Q1 2021, we see that hedge funds are turning bullish on CVS Health Corporation (NYSE: CVS), as 62 funds have positions in the company, up from 56 in the previous quarter. 

ClearBridge Investments has recently released its Q1 2021 investor letter and mentioned CVS Health Corporation (NYSE: CVS) and other stocks. Here is what the firm has to say: 

“Our underweights in health care and staples contributed to relative performance during the period. As we continue to focus the portfolio on high-conviction ideas, we sold CVS in the first quarter, in the health care sector.”

10. Medtronic plc (NYSE: MDT)

Market Cap: $170 billion Number of Hedge Fund Holders: 65

Medtronic plc (NYSE: MDT) is an American medical technology company that deals in medicine-related services and solutions. The company has operations in more than 370 locations in over 160 countries. It ranks tenth on our list of the best medical stocks to invest in. 

In Q4 FY21, Medtronic plc (NYSE: MDT) recorded revenue of $8.1 billion, showing 35% year-over-year growth. The EPS beat the market estimate of $1.42 and stood at $1.50. The company has shown productive results over the quarters, beating the market estimate 77% of the time. The MDT stock’s performance has also been smooth, gaining by 8.7% in the past six months and 41% in the past year. In Q4 FY21, Medtronic plc (NYSE: MDT) also announced an 8.6% increase in its dividend to $0.63, from $0.58 per share. According to the analysts at Piper Sandler, the stock can have a positive impact due to the FDA-approved cardiac cryoablation catheters. 

At the end of Q1 2021, 65 hedge funds tracked by Insider Monkey have stakes in Medtronic plc (NYSE: MDT), up from 59 in the previous quarter.

9. Becton, Dickinson and Company (NYSE: BDX)

Market Cap: $69.9 billion Number of Hedge Fund Holders: 65

Becton, Dickinson and Company (NYSE: BDX) is a New Jersey-based medical technology company that specializes in medical products and equipment. 

In Q2 FY21, Becton, Dickinson and Company (NYSE: BDX) generated over $4.8 billion in revenues, up 15% year-over-year. The medical sector accounted for over $2.3 billion and life sciences made $1.6 billion in Q2. The EPS stood at $3.19, beating the market estimate of $3.04. The company has performed efficiently against Covid-19 and has sold medical syringes worth $2 billion to over 40 countries. Earlier in May, Citigroup raised the price target on the BDX stock to $270 as the stock has gained by 5% in the past year. The company's diabetes business is gaining the attention of investors and analysts, as Piper Sandler raised the price target on the stock to $285 from $280, rating it as 'Overweight'. 

At the end of Q1 2021, 65 hedge funds tracked by Insider Monkey have positions in Becton, Dickinson and Company (NYSE: BDX), worth $3.73 billion. 

Like Merck & Co., Inc. (NYSE: MRK), Danaher Corporation (NYSE: DHR), Johnson & Johnson (NYSE: JNJ), and Teladoc Health, Inc. (NYSE: TDOC), Becton, Dickinson and Company (NYSE: BDX) is one of the best medical stocks to invest in.

8. AbbVie Inc. (NYSE: ABBV)

Market Cap: $199.5 billion Number of Hedge Fund Holders: 72

AbbVie Inc. (NYSE: ABBV) is an American pharmaceutical company that manufactures medicines by modern scientific techniques. The company has operations in over 70 countries with approximately 47,000 employees. 

In Q1 2021, AbbVie Inc. (NYSE: ABBV) has reported a revenue of $13 billion, compared with $8.6 billion during the same period last year. The EPS for the quarter was recorded at $2.95, beating the market estimate of $2.83. The ABV stock has grown by 17.5% in the past year, after seeing a low of $68 in March 2020. Moreover, AbbVie Inc. (NYSE: ABBV) has announced a quarterly dividend of $1.30 per share. Earlier in May, BMO Capital has raised the price target on the stock to $129 and ranked it as ‘Outperform’. 

At the end of Q1 2021, 72 hedge funds tracked by Insider Monkey have positions in AbbVie Inc. (NYSE: ABBV), worth $5.9 billion. 

Like UnitedHealth Group Incorporated (NYSE: UNH), Merck & Co., Inc. (NYSE: MRK), Teladoc Health, Inc. (NYSE: TDOC), and Sanofi (NASDAQ: SNY), AbbVie Inc. (NYSE: ABBV) is one of the best medical stocks to invest in. 

7. Bristol-Myers Squibb Company (NYSE: BMY)

Market Cap: $1.55 billion Number of Hedge Fund Holders: 81

Bristol-Myers Squibb Company (NYSE: BMY) ranks seventh on our list of the best medical stocks to invest in. It is a Fortune 500 American pharmaceutical company. It manufactures and produces medicines related to diseases such as cancer, diabetes, hepatitis, HIV, etc. The company has over 30,000 employees. 

In Q1 2021, Bristol-Myers Squibb Company (NYSE: BMY) generated revenue of over $11 billion, up 3% from $10.7 billion during the same period last year. The EPS stood at $1.74, missing the market estimate of $1.82. The BMY stock has also shown consistent performance, gaining 16% in the past year and 8.7% year to date. 

Bristol-Myers Squibb Company (NYSE: BMY) has announced a $3.1 billion deal with Eisai Co to develop a cancer-related MORAb-202 drug. The medicine would be able to treat malignant tumors, especially during the early stages of cancer. As of Q1 2021, 81 hedge funds tracked by Insider Monkey have positions in Bristol-Myers Squibb Company (NYSE: BMY), down drastically from 131 in the previous quarter. 

Wedgewood Partners released its Q4 2020 investor letter and mentioned Bristol-Myers Squibb Company (NYSE: BMY) in it. Here is what the firm has to say: 

“Bristol-Myers Squibb recently reported accelerating sales as much of the medical services industry returned to work. The Company continues to expect double-digit earnings growth over the next few years, driven by existing drugs, in addition to a broad pipeline of new drugs and indications. While the market remains fixated on a couple of patent expirations that could occur over the next several years, we think this is well-known at this point, yet the market still undervalues a couple of key acquisitions the Company has made in the past few years, particularly Celgene, which was acquired for a song.”

6. Danaher Corporation (NYSE: DHR)

Market Cap: $190 billion Number of Hedge Fund Holders: 81

Danaher Corporation (NYSE: DHR) is an American science and technology company that provides services in diagnostics and medical equipment. The company also manufactures commercial and industrial products. Danaher Corporation (NYSE: DHR) owns 20 operating companies, with over 59,000 employees globally. 

In Q1 2021, Danaher Corporation (NYSE: DHR) reported a revenue of over $6.8 billion, up from $4.3 billion during the same period last time, projecting a 58% growth. The diagnostic sector accounted for 34% of the revenue at $2.1 billion. The DHR stock has gained 55% in the past year and 19.6% in the past six months. The company has also announced a quarterly dividend of $0.21 per share. Earlier in April, Keybanc Capital raised the price target on DHR stock from $280 to $315. 

Danaher Corporation (NYSE: DHR) has announced its acquisition of Aldevron LLC in a $6.9 billion deal. Aldevron produces plasmid DNA, enzymes, mRNAs, which are vital in the Covid-19 vaccines. The company also has 81 hedge fund holders with stakes worth $5.7 billion, as of Q1 2021. 

Like Pfizer Inc. (NYSE: PFE), Johnson & Johnson (NYSE: JNJ), Abbott Laboratories (NYSE: ABT), and Novavax, Inc. (NASDAQ: NVAX), Danaher Corporation (NYSE: DHR) is one of the best medical stocks to invest in.  

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Disclosure: None. 15 Best Medical Stocks to Invest In is originally published on Insider Monkey