In this article, we discuss the 10 healthcare stocks to buy according to Mario Gabelli. If you want to skip our detailed analysis of these stocks, go directly to the 5 Healthcare Stocks to Buy According to Mario Gabelli.
Veteran investor Mario Gabelli is now almost 80-years-old with an incredibly long and successful career on Wall Street that spans more than four decades and is still ongoing. Gabelli chairs New York-based GAMCO Investors with over $11.7 billion in assets. The top ten holdings of the hedge fund comprise close to 14% of the portfolio. Most of the investments of GAMCO are concentrated in the industrial and consumer goods, services, and finance sectors. Gabelli has a personal net worth of close to $2 billion.
According to the latest securities filings, the portfolio value of GAMCO Investors increased by about $400 million between March and June this year. The fund made new purchases in 61 stocks, bought additional stakes in 245 equities, sold out of 62 stocks, and reduced holdings in 403 stocks during the second quarter. Gabelli, who has won several awards over the years that recognize his achievements as a money manager, pioneers a value investing strategy that places a focus on owning real assets.
Some of the top stocks in the investment portfolio of GAMCO Investors at the end of the second quarter of 2021 were The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and Microsoft Corporation (NASDAQ: MSFT), among others. Over the years, the success of Gabelli has been an exception in the world of finance that has broadly struggled to deal with tech-related challenges. GAMCO Investors has meanwhile beaten the benchmark S&P 500 by 2 percentage points over three decades.
Our Methodology
With this context in mind, here is our list of the 10 healthcare stocks to buy according to Mario Gabelli. These were ranked according to the investment portfolio of GAMCO Investors at the end of the second quarter of 2021. The list was compiled according to the value of each holding in the GAMCO portfolio.
The analyst ratings of each company are also discussed to provide readers with some more context about their investment decisions. The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
Why should be pay attention to Gabelli’s stock picks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Healthcare Stocks to Buy According to Mario Gabelli
10. HCA Healthcare, Inc. (NYSE: HCA)
Number of Hedge Fund Holders: 60
HCA Healthcare, Inc. (NYSE: HCA) is placed tenth on our list of 10 healthcare stocks to buy according to Mario Gabelli. The firm provides healthcare services and is headquartered in Tennessee. According to the latest filings, GAMCO Investors owned 36,790 shares in the company at the end of the second quarter of 2021 worth $7 million, representing 0.06% of the portfolio.
On July 21, investment advisory Truist maintained a Buy rating on HCA Healthcare, Inc. (NYSE: HCA) stock and raised the price target to $290 from $260, noting that there was rebounding demand for the services offered by the firm.
At the end of the second quarter of 2021, 60 hedge funds in the database of Insider Monkey held stakes worth $2.6 billion in HCA Healthcare, Inc. (NYSE: HCA), down from 62 the preceding quarter worth $3.2 billion.
Just like The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and Microsoft Corporation (NASDAQ: MSFT), HCA Healthcare, Inc. (NYSE: HCA) is one of the stocks in the portfolio of Mario Gabelli.
In its Q4 2020 investor letter, Bireme Capital, an asset management firm, highlighted a few stocks and HCA Healthcare, Inc. (NYSE: HCA) was one of them. Here is what the fund said:
“Since March we have increasingly tilted the long book towards stocks whose businesses will improve as the pandemic fades, a strategy we first discussed in our 1Q20 letter. Now that 2020 is — thankfully — over, let’s take a look back at some of our predictions from Q1.
HCA Healthcare (HCA) runs for-profit hospitals. In Q1, we said:
“We were shocked to see HCA initially trade down more than 50% in mid-March, in line with hotel companies and online travel agents. HCA will likely earn $11-12 in EPS when the COVID-19 crisis recedes, and we think the stock will trade back towards $150. Therefore, during Q1 we added we added ~80% to our shareholdings at an average price of roughly $90.”
If anything, this prediction was pessimistic. Despite the raging pandemic, 2020 revenue of $51.5b was actually up year-over-year. Earnings increased as well, with 2020 EPS of $10.93 and guidance of $12.10-13.10 in EPS for 2021. Said another way, in March HCA was trading for about 5 times 2021 earnings. We think that at $175 this stock is still cheap today and should trade at well over $200 per share.”
9. Pfizer Inc. (NYSE: PFE)
Number of Hedge Fund Holders: 67
Pfizer Inc. (NYSE: PFE) is ranked ninth on our list of 10 healthcare stocks to buy according to Mario Gabelli. The company makes and sells biopharmaceutical products and operates from New York. According to the latest data, GAMCO Investors owned 211,352 shares in the company at the end of June 2021 worth $8 million, representing 0.07% of the portfolio.
On August 18, investment advisory Cantor Fitzgerald maintained an Overweight rating on Pfizer Inc. (NYSE: PFE) stock and raised the price target to $61 from $53, noting that the product sales of the firm were continuing to exceed expectations.
At the end of the second quarter of 2021, 67 hedge funds in the database of Insider Monkey held stakes worth $2.3 billion in Pfizer Inc. (NYSE: PFE), up from 65 in the preceding quarter worth $2 billion.
In addition to The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and Microsoft Corporation (NASDAQ: MSFT), Pfizer Inc. (NYSE: PFE) is one of the stocks favored by Mario Gabelli.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Pfizer Inc. (NYSE: PFE) was one of them. Here is what the fund said:
“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 Pfizer in late 2020, in the health care sector.”
8. Merck & Co., Inc. (NYSE: MRK)
Number of Hedge Fund Holders: 79
Merck & Co., Inc. (NYSE: MRK) is a New Jersey-based healthcare company. It is placed eighth on our list of 10 healthcare stocks to buy according to Mario Gabelli. Securities filings show that GAMCO Investors owned 188,821 shares in the company at the end of the second quarter of 2021 worth $14 million, representing 0.12% of the portfolio.
On July 26, investment advisory Truist assumed coverage of Merck & Co., Inc. (NYSE: MRK) stock with a Buy rating and a price target of $92, noting that the stock could trade at 15-times the expected earnings per share by the next fiscal year.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Merck & Co., Inc. (NYSE: MRK) with 10.3 million shares worth more than $802 million.
Along with The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and Microsoft Corporation (NASDAQ: MSFT), Merck & Co., Inc. (NYSE: MRK) is one of the best stocks in the portfolio of Mario Gabelli.
In its Q1 2021 investor letter, Artisan Partners highlighted a few stocks and Merck & Co., Inc. (NYSE: MRK) was one of them. Here is what the fund said:
“In Q1, we initiated a position in Merck, a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. We purchased Merck when the stock came under pressure in part on concerns that the newly minted Biden administration could implement regulatory changes and lower drug costs in the pharmaceutical industry. Recent, but anticipated changes to Merck’s management team have also weighed on shares, as have concerns over the company’s heavy reliance on immunotherapy treatment Keytruda. Notably, Merck is not getting much credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions. While Merck is undergoing a period of transition, we think the company’s fundamentals are strong and believe changes to management should be a catalyst for improvement.”
7. Johnson & Johnson (NYSE: JNJ)
Number of Hedge Fund Holders: 88
Johnson & Johnson (NYSE: JNJ) is a New Jersey-based company that makes and sells several health-related products. It is ranked seventh on our list of 10 healthcare stocks to buy according to Mario Gabelli. 13F filings show that GAMCO Investors owned 105,103 shares in the company at the end of the second quarter of 2021 worth $17 million, representing 0.14% of the portfolio.
On May 28, investment advisory Morgan Stanley assumed coverage of Johnson & Johnson (NYSE: JNJ) stock with an Overweight rating and a price target of $187, noting that the advisory expected strong performance from all the three business segments the firm operated in.
At the end of the second quarter of 2021, 88 hedge funds in the database of Insider Monkey held stakes worth $7 billion in Johnson & Johnson (NYSE: JNJ), up from 81 in the previous quarter worth $6.9 billion.
The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and Microsoft Corporation (NASDAQ: MSFT) are some of stocks that Mario Gabelli favors, just like Johnson & Johnson (NYSE: JNJ).
6. Bio-Rad Laboratories, Inc. (NYSE: BIO)
Number of Hedge Fund Holders: 41
Bio-Rad Laboratories, Inc. (NYSE: BIO) is placed sixth on our list of 10 healthcare stocks to buy according to Mario Gabelli. The company markets life science research services and is headquartered in California. Latest data reveals that GAMCO Investors owned 27,690 shares in the company at the end of June 2021 worth $17 million, representing 0.15% of the portfolio.
In February, investment advisory Citi maintained a Buy rating on Bio-Rad Laboratories, Inc. (NYSE: BIO) stock and raised the price target to $750 from $675, noting the significant earnings beat of the firm in the quarterly results posted earlier.
At the end of the second quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Bio-Rad Laboratories, Inc. (NYSE: BIO), down from 44 in the previous quarter worth $890 million.
The Walt Disney Company (NYSE: DIS), JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Company (NYSE: WFC), and Microsoft Corporation (NASDAQ: MSFT) are some of the best stocks according to Mario Gabelli, in addition to Bio-Rad Laboratories, Inc. (NYSE: BIO).
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Disclosure. None. 10 Healthcare Stocks to Buy According to Mario Gabelli is originally published on Insider Monkey.
