This article looks at the 10 best healthcare stocks to buy under $50. If interested, you can also read our recent article on the 10 Best Healthcare Stocks To Buy According to Hedge Funds.
According to Michael Adams, the Lead Editor of Investing at Forbes, investments in healthcare stocks provide investors with consistent and steady returns because of the defensive nature of these stocks. No matter what the economic situation or direction of the stock market, people will always need healthcare and medical services.
The healthcare industry is thriving in the United States. A recent report highlighted a 7.5% increase in healthcare spending in the country in 2023, which was higher than the nominal GDP growth rate during the same year. The percentage of Americans with health insurance reached a record high of 93.1%, contributing to the high growth in healthcare expenditure last year. Between 2023 and 2032, the national healthcare spending in the United States is projected to grow at an average of 5.6% and outpace the GDP growth which is forecast at 4.3%.
The industry is steadily expanding globally as well. Recent predictions by McKinsey anticipate healthcare profits to grow from $583 billion in 2022 to a total of over $800 billion by 2027, at a CAGR of 7%. While the industry remained under pressure in 2023 due to labor shortages and high inflation rates, 2024 is poised to be a year of recovery due to a favorable risk-reward environment in the industry. The American investment firm believes that the events of 2023 have created an attractive opening for investors to spend in the healthcare sector.
Investments in artificial intelligence (AI) in healthcare have also surged over the last few years, growing at twice the pace of the tech industry, according to a report released by the Silicon Valley Bank this month. The story also stated that one in every four dollars spent in the healthcare sector goes to companies that are leveraging artificial intelligence. Already, an estimated $2.8 billion has been invested in AI healthcare corporations in 2024, with the Silicon Valley Bank expecting over $11 billion to be deployed in the sector this year.
Deloitte’s 2024 Global Health Care Sector Outlook has also mentioned that investor confidence in the healthcare sector remains high. Between 2019 and 2022, private equity funding worth $31.5 billion was invested in the sector. A large number of companies are incorporating artificial intelligence into their operations in the United States which has the potential to save around $360 billion in the country’s healthcare industry over the next five years. AI is likely to play a significant role in the foreseeable future in patient care, diagnosis, treatment, and medical administration. The automation of health records and the use of predictive analytics are set to further enhance the efficiency of healthcare providers and their services.
If you have made up your mind to invest in the healthcare sector and want to start small, stay with us as we shift our focus now to the best healthcare stocks to buy under $50.
A healthcare professional in front of a computer monitor analysing the results of a new prognosis prediction test.
Methodology
We went through the stock screeners for NASDAQ and NYSE to find healthcare stocks that had a current share price of less than $50 and then looked up those stocks on Insider Monkey’s database of 920 hedge funds as of Q1 2024. The stocks are ranked in ascending order of number of hedge fund holders in each company.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Healthcare Stocks to Buy Under $50
10. Protagonist Therapeutics, Inc. (NASDAQ:PTGX)
Number of Hedge Fund Holders: 38
Share Price: $31.76
Protagonist Therapeutics, Inc. (NASDAQ:PTGX) is a clinical-stage biopharmaceutical company serving customers globally. The firm specializes in the discovery and advancement of peptide-based chemicals to meet unmet medical needs. It is one of the best healthcare stocks to buy under $50, with 38 hedge fund holders bullish about the company.
The company’s share price has risen 10.5% over the last year, with anticipation that it will grow further with an average price target of around $41.5 based on forecasts by Jonathan Wollaben from JPM Securities and Douglas Tsao from HC Wainwright & Co. Both analysts this month reiterated their earlier ratings of Buy and Strong Buy respectively for Protagonist Therapeutics, Inc. (NASDAQ:PTGX).
9. Option Care Health, Inc. (NASDAQ:OPCH)
Number of Hedge Fund Holders: 39
Share Price: $28.12
One of the best healthcare stocks to buy under $50 is Option Care Health, Inc. (NASDAQ:OPCH), one of the largest home care medical services providers in the United States, serving patients with acute and chronic conditions across all 50 states in the country, with expertise in infusion therapy services.
In April this year, the company announced solid financial results for the first quarter of 2024 and posted a revenue of $1.1 billion, which beat analyst expectations by 4%. Option Care Health, Inc. (NASDAQ:OPCH)’s earnings per share totaled $0.26 for the quarter, against the forecast of $0.22.
Mike Shapiro, the CFO of the company shared the following remarks in Option Care Health, Inc. (NASDAQ:OPCH) Q1 2024 Earnings Call:
“The first quarter was a solid start to the year. Double-digit top-line growth was balanced across the portfolio as we delivered single-digit growth from our acute portfolio and mid-teens chronic therapy growth. With respect to the revenue mix in the quarter, we saw especially strong growth from some of our newer chronic therapies introduced over the last year. Chronic therapy growth far outpaced acute therapy growth which was not unexpected. Gross profit of $238.5 million represented 20.8% of revenue and grew 4.1% over the prior year.”
8. BridgeBio Pharma, Inc. (NASDAQ:BBIO)
Number of Hedge Fund Holders: 40
Share Price: $23.56
BridgeBio Pharma, Inc. (NASDAQ:BBIO) is a biopharmaceutical company that focuses on the development and delivery of medicines for patients suffering from genetically-driven diseases and cancers. It was named among the best healthcare stocks to buy under $50 in 2023 as well and has made Insider Monkey’s list again for the second successive year, with 40 hedge funds bullish about the company.
The number, however, is down from 44 in the last quarter of 2023. This is likely due to the net loss the company reported for FY2023 in December totaling $653 million, resulting in a loss per share of $3.95. Despite the downturn, analyst Josh Schimmer from Cantor Fitzerald has reiterated the Buy rating for the stock, while Geoff Meacham from B of A Securities and HC Wainwright & Co.’s Raghuram Selvaraju have maintained their Strong Buy ratings. The confidence from analysts stems from promising results demonstrated by the Infigratinib drug to treat children with achondroplasia.
7. GSK plc (NYSE:GSK)
Number of Hedge Fund Holders: 41
Share Price: $38.37
GSK plc (NYSE:GSK) is a British multinational pharmaceutical and biotechnology company, that is credited for the development of the first malaria vaccine in 2014, and later for its role alongside Sanofi Pasteur in developing the VidPrevtyn Beta Covid-19 vaccine which was widely used in Europe. GSK plc (NYSE:GSK) is one of the most affordable yet financially rewarding healthcare stocks to buy right now, According to Insider Monkey’s database, 41 hedge funds are bullish on the stock, which produced another solid quarter in Q1 2024.
Sales grew 13% during the quarter to a total of £7.4 billion ($9.3 billion), while the company’s operating profit expanded 35% to £2.4 billion ($3.03 billion). GSK plc (NYSE:GSK) also posted earnings per share of $1.09, beating Zacks Equity Research’s estimate of $0.94 per share.
Encouraged by strong quarterly results, CEO Emma Walmsley made the following remarks about her full-year expectations for the company in GSK plc (NYSE:GSK)’s Q1 2024 Earnings Call:
I’ll now turn to our full-year expectations. There is no change to our sales range of 5% to 7%, but we are increasingly confident of the full-year being towards the upper part of the range. We are upgrading our operating profit guidance from 9% to 11%, reflecting the strong start to the year and benefits from the Zejula patent dispute in the first quarter. We also expect royalty income to be slightly higher, between £550 million to £600 million in 2024. These benefits also flow through to our earnings per share, now upgraded to 8% to 10% for the year. I also wanted to give some colour on anticipated phasing throughout the year, starting with sales. Continued execution of the successful launches of Arexvy, Ojjaara, and Jemperli lifecycle innovation have contributed 5 percentage points of growth in Q1 and will continue to benefit Q2.
6. Walgreens Boots Alliance, Inc. (NASDAQ:WBA)
Number of Hedge Fund Holders: 41
Share Price: $15.66
Walgreens Boots Alliance, Inc. (NASDAQ:WBA) has had a difficult past year, with its share price declining 52% during the year. In fact, it has been a tough decade, with the company’s share losing 75% of its value over the last 10 years. The company has been greatly hurt by reimbursement pressures in the industry as pharmacy benefit management companies (PBMs) push to bring down reimbursement rates related to health insurance customers.
That said, investors remain confident about the company turning things around amid measures taken by the incumbent management. According to Insider Monkey, 41 hedge fund holders remain optimistic about the company. Ariel Appreciation Fund shared the following remarks about Walgreens Boots Alliance, Inc. (NASDAQ:WBA) in its first quarter 2024 investor letter:
Shares of retail drugstore operator, Walgreens Boots Alliance, Inc. (NASDAQ:WBA), declined over the period as challenging consumer and macroeconomic conditions, ongoing operational issues and a significant cut in the dividend weighed on shares. To address these performance lows, WBA’s new CEO is rebuilding the company’s management team with leaders who have significant experience in healthcare services. Meanwhile, WBA continues to execute on its cost-savings initiatives to optimize profitability and is using excess capital to prioritize the sustainability of its operations and balance sheet. Over the medium term, we expect a re-rating in shares as the new executive team earns credibility, margins, and free cash flow shows signs of improvement and the company deleverages. WBA shares are currently trading at a significant discount to our estimate of private market value.
5. Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE)
Number of Hedge Fund Holders: 42
Share Price: $39.56
Cerevel Therapeutics Holdings, Inc. (NASDAQ:CERE) specializes in developing novel therapies for neurological and mental diseases. As of Q1, 2024, 42 hedge funds are bullish on the stock in the first quarter of 2024, an improvement from 38 during the last quarter of 2023.
The company’s share price has been declining since the start of the year after it faced a delay in some of its clinical trials and has plunged by over 5% in the last month alone, which resulted in several investors selling their shares. However, its Relative Strength Index has dropped below 30 which suggests that the stock is oversold, indicating that a reversal in the share value is inevitable.