For Immediate Release
Chicago, IL – October 6, 2022 – Today, Zacks Investment Ideas feature highlights Molina Healthcare MOH, McKesson Corp. MCK and Humana HUM.
3 Top-Ranked Healthcare Stocks Thriving in 2022
With volatility rocking the market back and forth in 2022, it goes without saying that investors could benefit from injecting an additional layer of defense into their portfolios.
After all, defense wins ballgames.
When thinking of stocks with a defensive nature, healthcare comes to the front of many minds.
Healthcare companies can generate revenue in the face of any economic environment thanks to their services being in constant demand.
For those looking to level up their portfolio's defense, three top-ranked healthcare stocks – Molina Healthcare, McKesson Corp. and Humana – should all be considered.
The chart below illustrates the share performance of all three companies year-to-date with the S&P 500 blended in as a benchmark.
As we can see, all three have widely outperformed the general market in 2022, telling us that market participants have defended them all year long. Let's take a closer look at each one.
McKesson Corp. is a healthcare services and information technology company operating through two segments: Distribution Solutions and Technology Solutions.
MCK's near-term earnings outlook has turned visibly bright over the last several months, pushing the stock into a favorable Zacks Rank #2 (Buy).
Further, McKesson looks to continue its growth trajectory; for its current fiscal year (FY23), earnings are forecasted to climb by 3%.
And in FY24, bottom line estimates call for an additional 6.6% of growth.
MCK's top line is also in exceptional health – revenue estimates suggest Y/Y growth of 5% and 4.3% in FY23 and FY24, respectively.
McKesson shares could also be seen as undervalued, further bolstered by its Style Score of an A for Value. The company's 14.5X forward earnings multiple is above its five-year median but represents a sizable 31% discount relative to its Zacks Medical Sector.
Molina Healthcare is a multi-state managed care organization participating exclusively in government-sponsored healthcare programs. MOH sports a Zacks Rank #2 (Buy).
Analysts have raised their bottom-line outlook across nearly all timeframes over the last several months.
Molina Healthcare's growth trajectory is impossible to ignore – the Zacks Consensus EPS Estimate of $17.65 for its current fiscal year (FY22) pencils in a stellar double-digit 31% Y/Y uptick. For FY23, estimates are calling for an additional 13.5% of growth.
The projected earnings growth comes on top of forecasted Y/Y revenue increases of 12.5% and 6.3% in FY22 and FY23, respectively.
Further, Molina Healthcare has an impressive earnings track record, exceeding revenue and earnings estimates in each of its last four quarters. Just in its latest print, the company registered a 4.8% EPS beat paired with a 6.2% revenue beat.
Humana is a health care plan provider in the United States, providing health insurance benefits under Health Maintenance Organization, Private Fee-For-Service, and Preferred Provider Organization plans. HUM sports a Zacks Rank #2 (Buy)
Over the last few months, analysts have had a bullish stance on the company's bottom line outlook while also being in full agreement.
HUM shares trade at a 20.2X forward earnings multiple, just a tick above their 19.7X five-year median and representing a slight 5% discount relative to their Zacks Medical Sector average.
Humana boasts a Style Score of an A for Value.
Like MOH and MCK, Humana carries a rock-solid growth profile; earnings are forecasted to grow by 21% in FY22 and a further double-digit 12% in FY23.
Humana's top line estimates are also inspiring – the Zacks Consensus Sales Estimate of $93 billion for FY22 suggests revenue growth of nearly 12% compared to FY21 sales of $83.1 billion. In FY23, estimates call for a further 9% of revenue growth.
While price action in 2022 has been overwhelmingly negative, some areas, such as healthcare stocks, are putting their defensive nature on full display.
Consumers have a never-ending need for the services these companies provide, helping explain why these stocks are generally seen as a safer place to park cash.
All three stocks above operate in the healthcare realm, have betas of less than 1.0, and have inspiring growth profiles.
To put the cherry on top, all three carry a favorable Zacks Rank.
All three deserve a watchlist spot for those looking to deploy a heavier defensive approach.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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McKesson Corporation (MCK) : Free Stock Analysis Report
Humana Inc. (HUM) : Free Stock Analysis Report
Molina Healthcare, Inc (MOH) : Free Stock Analysis Report
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