In this article, we talk about the 10 best healthcare stocks to buy now according to Motley Fool’s 1623 Capital. If you wish to skip our detailed analysis of 1623 Capital’s hedge fund performance and stock picks, go directly to 5 Best Healthcare Stocks To Buy Now According To Motley Fool’s 1623 Capital.
1623 Capital is a subsidiary of The Motley Fool, and was founded in 2018. It employs a fundamental long/short equity strategy, and is based in Alexandria, Virginia. As of the end of the first quarter of 2022, 1623 Capital boasts $199.56 million in assets under management, as compared to $268 million at the end of December.
In the first quarter, 1623 Capital made 11 new stock purchases, increased positions in 13, sold out of 18 equities and reduced holdings in 12 stocks. Some of the most noteworthy stocks in 1623 Capital’s Q1 portfolio include big names such as Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Block, Inc. (NYSE:SQ).
United States, the world’s largest economy, spent 19.7% of its total GDP (gross domestic product) on healthcare in 2020, and boasts the biggest healthcare industry in the world. The Russell 3000 HealthCare Index, a benchmark for the global healthcare sector, posted returns of nearly 20% in 2021. This highlights the growing prevalence of healthcare businesses in the post-Covid world, where cutting-edge treatments for complex, emerging diseases are constantly being researched and discovered. Some of the biggest names in the healthcare industry include Pfizer Inc. (NYSE:PFE), Johnson & Johnson (NYSE:JNJ), and CVS Health Corporation (NYSE:CVS).
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Our Methodology
Best Healthcare Stocks To Buy Now According To Motley Fool’s 1623 Capital
10. Quanterix Corporation (NASDAQ:QTRX)
1623 Capital’s Stake Value: $356,000
Percentage of 1623 Capital’s 13F portfolio: 0.17%
Number of Hedge Fund Holders: 17
Quanterix Corporation (NASDAQ:QTRX) is first up on our list of the best healthcare stocks to buy according to 1623 Capital. The fund owned roughly 12,000 shares of QTRX in the first quarter at a value of $356,000, representing 0.17% of its overall portfolio. The Massachusetts-based company deals in the development of digital immunoassay platforms that advance precision health for life sciences research and diagnostics.
On May 11, Cowen analyst Max Masucci maintained an ‘Outperform’ rating on Quanterix Corporation (NASDAQ:QTRX) shares and revised the price target to $38 from $60. He noted that the shares deserve to trade higher, given that the company has $374 million in cash on its balance sheet which highlights a compelling growth trajectory and a logical path to breakeven.
In April, Quanterix Corporation’s (NASDAQ:QTRX) Simoa neurofilament light chain plasma test was granted Breakthrough Device designation by the Food and Drug Administration (FDA) to help in the management of patients with sclerosis.
Out of the 900+ hedge funds tracked by Insider Monkey at the close of the first quarter, 17 reported ownership of positions in Quanterix Corporation (NASDAQ:QTRX) with a combined value of $171.1 million. This is down from 21 hedge funds with $236 million in stakes a quarter earlier. Millennium Management, with a $53.11 million stake, was the most prominent shareholder of Quanterix Corporation (NASDAQ:QTRX) in Q1 2022.
Along with Quanterix Corporation (NASDAQ:QTRX), stocks such as Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Block, Inc. (NYSE:SQ) are on the radar of investors on Wall Street.
9. Insulet Corporation (NASDAQ:PODD)
1623 Capital’s Stake Value: $388,000
Percentage of 1623 Capital’s 13F portfolio: 0.19%
Number of Hedge Fund Holders: 40
Insulet Corporation (NASDAQ:PODD) is an American company which makes and sells insulin delivery systems called Omnipods, which can be worn by diabetic patients to administer insulin through a painless, digitally-managed mechanism.
1623 Capital’s stake in Insulet Corporation (NASDAQ:PODD) during the first quarter was recorded at nearly 1,500 shares priced at $388,000. This represented 0.19% of the fund’s overall holdings, and was a 37% reduction in stake over the previous quarter.
On account of increasing inflationary expenses, rising interest rates, China lockdowns and headwinds from hospital staffing and capital spending in the United States, Citi analyst Joanne Wuensch on July 11 downgraded Insulet Corporation (NASDAQ:PODD) to ‘Neutral’ from ‘Buy’ with a price target of $250, down from $310. The analyst sees a difficult Q2 for the medical supply and technology group. Insulet Corporation (NASDAQ:PODD) shares have slid 18.53% in the year to date as of July 12.
Overall, 40 hedge funds disclosed ownership of positions in Insulet Corporation (NASDAQ:PODD) at the close of Q1 2022, with $1.29 billion in combined stakes. This is in comparison to 39 hedge funds a quarter earlier with $1.48 billion worth of positions in the company. D1 Capital Partners was the leading shareholder of Insulet Corporation (NASDAQ:PODD) in the first quarter, with a position consisting of 1.44 million shares worth $384.1 million.
Here is what ClearBridge Investments had to say about the market position and prospects of Insulet Corporation (NASDAQ:PODD) in its Q1 2022 investor letter:
“Health care has always been a core foundation of the portfolio and we have been diversifying our health care exposure to include services and solutions beyond our traditional overweight to biopharmaceuticals and managed care. We first purchased Insulet (NASDAQ:PODD) , a leading provider of insulin pumps for diabetes patients, in the fourth quarter of 2021, and we have aggressively added to the position since then. The company is currently the only meaningful manufacturer of patch pumps, the preferred form factor for many patients as compared to traditional tubed pumps. We believe Insulet has a long runway for growth given its large and underpenetrated market, which is only one-third penetrated in Type 1 diabetes and low-single-digit penetrated in the insulin- intensive Type 2 diabetes population. Additionally, we see the launch of the company’s next generation offering, Omnipod 5, which received FDA clearance in January, as an accelerant to growth. Insulet has strong gross margins and is profitable today, though we still see room for significant operating margin expansion ahead.”
8. DexCom, Inc. (NASDAQ:DXCM)
1623 Capital’s Stake Value: $430,000
Percentage of 1623 Capital’s 13F portfolio: 0.21%
Number of Hedge Fund Holders: 58
DexCom, Inc. (NASDAQ:DXCM) deals in the development and marketing of continuous glucose monitoring systems for diabetes management. A total of 58 hedge funds from the Q1 database of Insider Monkey were stakeholders of the company at the end of March, with aggregate positions worth $1.48 billion. This represents a downward trend from the quarter before, where 71 hedge funds were long DexCom, Inc. (NASDAQ:DXCM) shares.
On June 24, BTIG analyst Marie Thibault lowered the firm’s price target on DexCom, Inc. (NASDAQ:DXCM) to $105 from $135 on account of the uncertainty in the macro setup, but maintained a ‘Buy’ rating on the company shares. On May 31, Piper Sandler analyst Matt O’Brien noted that he views Abbott’s FDA approval of its Libre 3 for diabetes management as a positive sign that the agency is moving diabetes products through the pipeline, which bodes well for a company like DexCom (DXCM) which has new products in the pipeline. DexCom, Inc. (NASDAQ:DXCM) recently refuted market rumors of a possible merger with Insulet Corporation (NASDAQ:PODD), and as the company has risen 14.68% in the last 1 month as of July 12, the analyst expects this rally to continue.
In the first quarter, 1623 Capital held 840,000 shares of DexCom, Inc. (NASDAQ:DXCM) worth $430,000, which accounted for 0.21% of its total portfolio. This represented a 28% decrease in holding over the previous quarter. Holocene Advisors was the leading shareholder of DexCom, Inc. (NASDAQ:DXCM) in the first quarter, with over 425,000 shares valued at $217.9 million.
7. Verve Therapeutics, Inc. (NASDAQ:VERV)
1623 Capital’s Stake Value: $430,000
Percentage of 1623 Capital’s 13F portfolio: 0.21%
Number of Hedge Fund Holders: 19
Verve Therapeutics, Inc. (NASDAQ:VERV) develops gene editing medicines to treat cardiovascular diseases.
BMO Capital analyst Kostas Biliouris on June 16 initiated coverage of Verve Therapeutics, Inc. (NASDAQ:VERV) with an ‘Outperform’ rating and a price target of $48. The analyst named VERV as his top pick in the biotech sector, noting that its “differentiated” gene editing approach has shown robust efficacy while its mechanism appears safer than first-generation approaches. Biliouris also noted that the company’s data is “supported by top-notch literature,” and has been called “too good to be true” by key opinion leaders.
A detailed study of the 912 hedge funds tracked by Insider Monkey at the end of the first quarter showed that 19 hedge funds were bullish on Verve Therapeutics, Inc. (NASDAQ:VERV), as compared to 20 hedge funds a quarter earlier. With a $71.6 million stake, Casdin Capital was largest shareholder of the company in the first quarter of 2022.
6. Inari Medical, Inc. (NASDAQ:NARI)
1623 Capital’s Stake Value: $512,000
Percentage of 1623 Capital’s 13F portfolio: 0.25%
Number of Hedge Fund Holders: 21
Inari Medical, Inc. (NASDAQ:NARI) develops medical devices, including a mechanical thrombectomy system, for the interventional treatment of various diseases. It is headquartered in California. Motley Fool’s 1623 Capital owned nearly 6,000 shares of the company at the end of the first quarter, priced at $512,000 and accounting for 0.25% of its overall portfolio.
21 hedge funds held combined positions worth $186.9 million in Inari Medical, Inc. (NASDAQ:NARI) at the end of March. This shows a positive trend from the previous quarter where 16 hedge funds were stakeholders in the company. Millennium Management, with a $55.1 million stake, was the most prominent shareholder of Inari Medical, Inc. (NASDAQ:NARI) in the first quarter of 2022.
On June 21, Piper Sandler analyst Adam Maeder initiated coverage of Inari Medical, Inc. (NASDAQ:NARI) with an ‘Overweight’ rating and a price target of $100. The analyst forecasts a favorable setup for the firm into the remainder of 2022 and 2023, owing to a “handful of growth drivers.” Maeder also noted that mechanical thrombectomy is positioned to become the standard of care for the treatment of venous thromboembolism, and sees Inari as well-positioned in this segment.
Baron Funds discussed many stocks in its Q2 2021 investor letter, and Inari Medical, Inc. (NASDAQ:NARI) was one of them. Here’s what the investment firm said:
“Inari Medical, Inc. offers catheter-based devices to remove clots from venous thromboembolism (“VTE”), the third most common vascular condition in the U.S. after heart attacks and strokes, and which can be fatal if left untreated. Shares declined during the quarter as high-growth companies with high valuations sold off. We maintain conviction, as the VTE treatment space is still in the very early days of converting to device-based interventions, and we believe Inari is well positioned to benefit.”
Along with Amazon.com, Inc. (NASDAQ:AMZN), Apple Inc. (NASDAQ:AAPL), and Block, Inc. (NYSE:SQ), Inari Medical, Inc. (NASDAQ:NARI) is an exciting stock to consider in 2022.
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