In this article, we will take a look at the 10 best healthcare stocks for the long term. You can skip this part and go to 5 Best Healthcare Stocks For the Long Term.
The healthcare sector is one of those rare, evergreen areas of the industry that refuse to waver even when the entire market is shaking. According to a Credit Suisse report, the healthcare industry remained strong in 2022 despite the global macro downturn. The report said that as of November 28, 2022, the industry’s YTD return in 2022 was -6.2%, “substantially outperforming” broader equity markets.
The report said that there are several factors that make the healthcare sector immune to the global macroeconomic situation. One of the key growth drivers in the industry is the problem of aging population. An aging population drives growth for medicines, healthcare services and related equipment and this space is not as affected by inflation or rate hikes as other parts of the market.
According to McKinsey, healthcare profit pools are expected to grow at a 4% CAGR from 2021 through 2026. The firm said that inflation and high interest rates caused it to cut its initial estimates for this growth. While McKinsey believes the industry will have to face challenges in 2023, it said the healthcare space will see recovery in 2024. Some areas of the healthcare industry are expected to see rapid growth, according to McKinsey. These include healthcare services providers, software platforms for patient engagement and clinical decision support and specialty pharmacy within pharmacy services.
The healthcare sector will continue to pour billions into long-term growth pipelines in high-growth streams like infectious diseases, cancer, virology and neurological diseases. These investments continue to make healthcare and biotech sectors attractive areas for investors where they can expect long-term return on their investments.
Healthcare stocks didn’t have a strong start in 2023, amid rising worries that the coronavirus is making a comeback. Non-essential healthcare companies lose demand of their products and services during lockdowns as patients postpone or cancel their non-emergency appointments. However, the outlook for the sector remains strong for the long term. That’s why in this article our focus would be long-term healthcare and biotech stocks to invest in.
Photo by National Cancer Institute on Unsplash
Our Methodology
For this article we used the Finviz stock screener and picked healthcare stocks that have PE ratios (TTM basis) under 20, sales growth of over 25% on a quarter-over-quarter basis and EPS growth of over 25% on a quarter-over-quarter basis. These high growth, low PE stocks have some long-term growth catalysts that can lift their stock prices in the future. We have discussed these growth catalysts and gave a brief overview of these companies’ products. PE ratios (TTM) were taken from Yahoo Finance.
10 Best Healthcare Stocks For the Long Term
10. Valneva SE (NASDAQ:VALN)
PE Ratio (TTM): 8.38
Number of Hedge Fund Holders: 1
Valneva SE (NASDAQ:VALN) is a French biotech company that has some short-term growth catalysts. In December, Valneva SE (NASDAQ:VALN) rose after the company said it completed rolling submission of an application to the FDA for its single-shot chikungunya vaccine for people aged 18 years and above. Valneva SE (NASDAQ:VALN) said this vaccine was backed by a phase 3 study.
Benjamin A. Smith’s Laurion Capital Management owns a $251,000 stake in Valneva SE (NASDAQ:VALN) as of the end of the September quarter.
9. Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA)
PE Ratio (TTM): 6.73
Number of Hedge Fund Holders: 13
Shares of Bermuda-based Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) have gained about 27% over the past year. Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) is known for ARCALYST. Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) paid $5 million upfront to acquire this drug from Regeneron (REGN) back in 2017. The treatment addresses cryopyrin-associated periodic syndromes. Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) has several other solid growth catalysts that can lift its stock price in the coming months and years.
In September 2022, Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) entered into an agreement with Roche for the development and commercialization rights to Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA)’s pipeline asset vixarelimab, a fully human monoclonal antibody targeting oncostatin M receptor beta
As of the end of the third quarter, 13 hedge funds tracked by Insider Monkey had stakes in Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA). The total value of these stakes was $140 million. The biggest stakeholder of Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) was Lei Zhang’s Hillhouse Capital Management which owns a $37.5 million stake in Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA).
8. Vir Biotechnology, Inc. (NASDAQ:VIR)
PE Ratio (TTM): 2.97
Number of Hedge Fund Holders: 18
Vir Biotechnology, Inc. (NASDAQ:VIR) is operating in the infectious disease space. In November, Vir Biotechnology, Inc. (NASDAQ:VIR) posted strong Q3 results, driven by its partnership with GSK. Vir Biotechnology, Inc. (NASDAQ:VIR)’s revenue in the quarter more than doubled in the period. Revenue in the period came in at $374.6 million, crushing estimates y $260.32 million. Vir Biotechnology, Inc. (NASDAQ:VIR) rose 6.7% to $23.27 after hours.
Vir Biotechnology, Inc. (NASDAQ:VIR) is making products to treat Covid-19, Hepatitis B, Influenza and several other viral diseases. It can be a strong pick for the long term since Vir Biotechnology, Inc. (NASDAQ:VIR) has several growth catalysts. As of the end of the third quarter, 18 hedge funds tracked by Insider Monkey reported having stakes in Vir Biotechnology, Inc. (NASDAQ:VIR), compared to 13 funds in the previous quarter.
7. DocGo Inc. (NASDAQ:DCGO)
PE Ratio (TTM): 14.95
Number of Hedge Fund Holders: 19
DocGo Inc. (NASDAQ:DCGO) is operating in the lucrative market of telehealth services. According to Grand View Research, the global telehealth market size was valued at about $83.5 billion in 2022 and this figure is expected to soar to $101.2 billion by 2023. Amid aging population and people’s changing preferences, the demand of telehealth services is expected to rise. DocGo Inc. (NASDAQ:DCGO) offers telehealth services and its platform is fully integrated with some of the largest Electronic Medical Records [EMR] systems in the country. DocGo Inc. (NASDAQ:DCGO) also uses AI to predict any emergencies and uses the technology to find solutions to problems like high traffic on roads and possible delays in reaching patients in emergencies.
As of the end of the third quarter, 19 hedge funds tracked by Insider Monkey reported having stakes in DocGo Inc. (NASDAQ:DCGO). The total value of these stakes was $71.5 million.
6. Immatics N.V. (NASDAQ:IMTX)
PE Ratio (TTM): 15.52
Number of Hedge Fund Holders: 25
Immatics N.V. (NASDAQ:IMTX) uses the T cell receptor [TCR]-based technology to find treatments for cancer. Immatics N.V. (NASDAQ:IMTX)’s treatments target solid tumors. Immatics N.V. (NASDAQ:IMTX)’s treatments are expected to take a long time to reach final approvals. There is also risk involved, but long-term returns of Immatics N.V. (NASDAQ:IMTX) could be beneficial for those who can wait. In October 2022, Immatics N.V. (NASDAQ:IMTX) jumped after the company posted interim data for its solid tumor candidate IMA203. The results showed potential of the TCR-engineered cell therapy as a multi-tumor target in a Phase 1 trial.
As of the end of the third quarter of 2022, 25 hedge funds in Insider Monkey’s database of 920 funds had stakes in Immatics N.V. (NASDAQ:IMTX). The total value of these stakes was $172 million. The biggest stakeholder of Immatics N.V. (NASDAQ:IMTX) was Julian Baker and Felix Baker’s Baker Bros. Advisors, with a stake worth over $44 million.
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Disclosure: None. 10 Best Healthcare Stocks For the Long Term is originally published on Insider Monkey.
