In this article, we will take a look at the 12 best medical stocks to buy under $20.
The medical industry plays a crucial role in ensuring the health and safety of populations. Driven by advancements in medical technology and an aging population, the medical and healthcare industry is expected to grow significantly in the coming years.
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According to Deloitte’s 2024 Global Healthcare Sector Outlook, the use of technologies like artificial intelligence (AI) is rising in the healthcare sector. Healthcare providers and technology companies are introducing various kinds of AI tools that can help improve clinical outcomes. These technological advancements can streamline various administrative tasks while also enhancing the quality of care provided to patients.
Healthcare in the US
In the US, healthcare costs and spending have been rising. As reported by the Centers for Medicare & Medicaid Services, healthcare spending in the United States reached $4.9 trillion in 2023, reflecting a 7.5% increase from 2022. In 2023, the healthcare sector accounted for 17.6% of the US economy in 2023, up from 17.4% in 2022. Rise in private health insurance and Medicare were the two main drivers of this growth.
Donald Trump nominated Robert F. Kennedy Jr. to serve as the next Secretary of Health and Human Services, a role that covers various aspects of public health, including medical research and food safety. If confirmed, Kennedy would oversee key agencies like the US Food and Drug Administration (FDA) and Centers for Disease Control and Prevention (CDC) and the head of the Centers for Medicare and Medicaid Services (CMS). In an NPR interview in November, Kennedy said that Trump had tasked him with eliminating corruption in health agencies, restoring evidence-based practices, and addressing the chronic disease epidemic. It’s not clear how Kennedy’s nomination could impact the healthcare sector as his specific policies are not yet clear and he has yet to receive confirmation by the US Senate.
Chris Schott, JPMorgan’s healthcare analyst, pointed out in a note to clients that the industry is currently experiencing “a period of max uncertainty” until the position is filled. However, Schott noted that this situation also means that the large-cap stocks are currently trading at a 35% discount to the S&P 500, presenting a significant opportunity for growth.
Jared Holz, Mizuho’s healthcare expert, said in a note to clients that he acknowledges some of Kennedy’s concerns, such as America’s obesity epidemic and the risks associated with ultra-processed foods. Holz noted that this is a complicated topic but emphasized that there is substantial room for improvement in public health.
However, Kennedy is known as an anti-vaxxer and this has concerned some Wall Street analysts about his possible effect on the vaccine industry. He has also expressed skepticism about GLP-1s, which he believes are not the solution to the obesity problem. Additionally, Kennedy has advocated for stricter regulations on ultra-processed foods, which are linked to rising obesity rates in the country.
With this background in mind, let’s take a look at the 12 best medical stocks to buy under $20.
A nurse talking on the phone with a client while assisting them in filling out paperwork for a medical insurance policy, demonstrating the company’s dedication to customer service.
Methodology
To compile our list of the 12 best medical stocks to buy under $20, we used the Finviz stock screener. We sorted our results based on market capitalization and picked the top 30 medical companies with a share price of under $20 as of January 8, 2024. Next, we focused on the top 12 stocks most favored by institutional investors. Data for the hedge fund sentiment surrounding each stock was taken from Insider Monkey’s Q3 2024 database of 900 elite hedge funds. The 12 best medical stocks to invest in were then ranked in ascending order based on the number of hedge funds holding stakes in them as of Q3 2024.
Why do we care about what hedge funds do? 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).
12 Best Medical Stocks To Buy Under $20
12. Bausch Health Companies Inc. (NYSE:BHC)
Share Price as of January 8: $7.83
Number of Hedge Fund Holders: 30
Bausch Health Companies Inc. (NYSE:BHC) is a diversified global pharmaceutical company that ranks among the best medical stocks to buy. The company develops and markets a range of products, primarily in gastroenterology, neurology, dermatology, medical aesthetic devices, and international pharmaceuticals. It offers both branded and generic pharmaceuticals as well as over-the-counter (OTC) products in over 90 countries around the world.
The company’s diverse and robust portfolio of products has allowed it to consistently deliver strong financial results. In Q3 2024, Bausch Health Companies Inc. (NYSE:BHC) achieved its sixth consecutive quarter of year-over-year growth in both revenue and adjusted EBITDA. The company reported consolidated revenues of $2.51 billion, a 12% increase year-over-year. The adjusted EBITDA for Q3 2024 reached $909 million, up 10% from the previous year. This growth was driven by strong performance across all segments.
The company is strategically launching new products and advancing its pipeline. In September 2024, Bausch Health Companies Inc. (NYSE:BHC) announced the approval and launch of CABTREO in Canada. CABTREO is a triple-combination topical treatment for acne vulgaris in patients aged 12 and older. Additionally, Bausch Health Companies Inc. (NYSE:BHC) introduced the Clear and Brilliant touch laser device for skin rejuvenation in the Philippines, expanding its presence in the international market.
11. Sotera Health Company (NASDAQ:SHC)
Share Price as of January 8: $13.39
Number of Hedge Fund Holders: 31
Sotera Health Company (NASDAQ:SHC) is a leading global provider of sterilization solutions, lab testing, and advisory services for the healthcare and medical industry. The company operates through three main businesses: Sterigenics, Nordion, and Nelson Labs. As one of the best medical stocks to buy, Sotera Health Company (NASDAQ:SHC) offers essential services to ensure the safety and efficacy of medical products and healthcare services.
All 3 of the company’s businesses have been performing well. In the third quarter of 2024, Sotera Health Company (NASDAQ:SHC) reported net revenues of $285 million, an increase of 8.5% year-over-year. Sotera Health Company (NASDAQ:SHC) also achieved a net income of $17 million, a significant turnaround from a net loss of $14 million in Q3 2023. This growth was driven by strong performance across all three business segments. Sotera Health Company’s (NASDAQ:SHC) management has outlined ambitious financial goals for 2025-2027, targeting an organic revenue growth rate of 5% to 7% and an adjusted EBITDA margin expansion of at least 50 basis points. The company also aims to generate over $500 million in cumulative free cash flow during this period.
During the third quarter, Sterigenics completed a significant capacity expansion project, which is expected to enhance its service capabilities. This strategic investment is expected to support the company’s goal of meeting the increasing demand for sterilization services in the healthcare sector.
10. Organon & Co. (NYSE:OGN)
Share Price as of January 8: $16.00
Number of Hedge Fund Holders: 32
Organon & Co. (NYSE:OGN) is a global healthcare and pharmaceutical company that is primarily focused on improving women’s health and well-being. The company’s portfolio and innovation pipeline is focused on various areas, including bacterial vaginosis, breast cancer, contraception, endometriosis, menopause, polycystic ovarian syndrome (PCOS), and postpartum hemorrhage (PPH). Organon & Co. (NYSE:OGN) provides a diverse range of over 60 medicines and products in women’s health, biosimilars, and a broad portfolio of established medications across various therapeutic areas.
The company has a strong lineup of products and is actively seeking to enhance its offerings. Organon & Co.’s (NYSE:OGN) largest product, Nexplanon, is expected to generate $1 billion in revenue in 2025. The recent acquisition of Dermavant Sciences Ltd. in October 2024 enhanced the company’s portfolio in immuno-dermatology with innovative treatments like VTAMA, allowing for further growth opportunities. On December 16, 2024, Organon & Co. (NYSE:OGN) announced FDA’s approval for VTAMA (tapinarof) cream for treating atopic dermatitis in adults and children aged two and older.
The company has also maintained disciplined operating costs while driving growth. Organon & Co. (NYSE:OGN) aims to achieve approximately $1 billion in free cash flow for 2024. As of November, the company had already generated nearly $700 million in free cash flow. This strong cash flow supports its dividend payments and provides the flexibility to invest in high-potential assets. The Board of Directors declared a quarterly dividend of $0.28 per share, reflecting the company’s commitment to returning value to shareholders while also focusing on future growth.
9. Walgreens Boots Alliance Inc. (NASDAQ:WBA)
Share Price as of January 8: $9.22
Number of Hedge Fund Holders: 33
Walgreens Boots Alliance Inc. (NASDAQ:WBA) is an American multinational health and medical company that provides a range of pharmacy, healthcare, and retail services. The company has approximately 12,500 locations across the US, Europe, and Latin America. It operates through well-known brands like Walgreens, Boots, Duane Reade, o7 Beauty Company, and Benavides.
The company is focused on strategic cost management initiatives and optimizing its retail presence. In its fiscal 2024, Walgreens Boots Alliance Inc. (NASDAQ:WBA) successfully exceeded its targets for cost savings and capital expenditure reductions, which included $1 billion in cost savings, a $600 million decrease in capital expenditures, and $500 million in working capital initiatives. Walgreens Boots Alliance Inc. (NASDAQ:WBA) is implementing a strategic footprint optimization program aimed at closing approximately 1,200 underperforming stores over the next three years. The company has planned around 500 closures for fiscal 2025. Walgreens Boots Alliance Inc. (NASDAQ:WBA) expects that this strategic move will enhance adjusted earnings per share (EPS) and improve free cash flow immediately.
Additionally, the company is committed to being relevant to today’s consumers while reevaluating its merchandising strategy. Walgreens Boots Alliance Inc. (NASDAQ:WBA) plans to expand its own brand offerings while being selective with national brands, particularly in health and wellness categories. Over 300 new owned brand products were launched in fiscal 2024. The company has plans for another 300 in fiscal 2025.
8. Bausch + Lomb Corporation (NYSE:BLCO)
Share Price as of January 8: $18.08
Number of Hedge Fund Holders: 34
Bausch + Lomb Corporation (NYSE:BLCO) is a leading eye health company that develops a variety of products aimed at improving vision and eye care. The company has a portfolio of around 400 products, providing solutions including contact lenses, lens care items, ophthalmic pharmaceuticals, over-the-counter products, and surgical devices. As a significant player in the global eye health sector, Bausch + Lomb Corporation (NYSE:BLCO) has a presence in nearly 100 countries.
The company is expanding its product offerings through innovations and acquisitions, which has led to strong financial performance. In the third quarter of 2024, Bausch + Lomb Corporation (NYSE:BLCO) reported a total revenue of $1.196 billion, which represents a 19% increase year-over-year. This growth was driven by strong performances across various segments, particularly in the pharmaceuticals sector, which saw revenue rise by 76% to $306 million. The increase was largely attributed to the launch of MIEBO and the acquisition of XIIDRA, which was completed in September 2024. XIIDRA is a treatment for dry eye disease while MEIBO is the first and only prescription eye drop that directly targets tear evaporation to treat the signs and symptoms of dry eye disease.
The company has also recently introduced the enVista Envy intraocular lens (IOL) in Canada, which was also approved by the US FDA in October 2024. On top of that, on December 11, 2024, Bausch + Lomb Corporation (NYSE:BLCO) announced its acquisition of Elios Vision, Inc., which develops a minimally invasive glaucoma surgery procedure using an excimer laser. This acquisition expands the company’s glaucoma treatment options and complements its existing pharmaceutical and surgical offerings.
7. Centessa Pharmaceuticals Plc (NASDAQ:CNTA)
Share Price as of January 8: $16.10
Number of Hedge Fund Holders: 34
Centessa Pharmaceuticals Plc (NASDAQ:CNTA) is a clinical-stage pharmaceutical company that focuses on discovering and developing innovative medicines for patients. The company aims to develop potential first-in-class and best-in-class therapies, particularly in the fields of rare diseases and immuno-oncology.
The company is focused on rare diseases and has promising drug candidates. Centessa Pharmaceuticals Plc (NASDAQ:CNTA) is making significant strides with its lead candidate, ORX750, an orally administered orexin receptor 2 (OX2R) agonist designed to treat conditions like narcolepsy type 1 (NT1), narcolepsy type 2 (NT2), and idiopathic hypersomnia (IH). Recent data from ongoing Phase 1 trials indicate that ORX750 has strong potential as a best-in-class treatment for these sleep disorders. Centessa Pharmaceuticals Plc (NASDAQ:CNTA) has initiated a Phase 2a study for ORX750 and expects results in 2025. In addition to ORX750, Centessa Pharmaceuticals Plc (NASDAQ:CNTA) is advancing other OX2R agonists and has recently nominated ORX489 as a new candidate for development. This strategic focus on multiple compounds within the OX2R agonist franchise is aimed at addressing a range of neurological and psychiatric disorders.
Financially, the company reported cash, cash equivalents, and short-term investments totaling $518.4 million as of September 30, 2024. This strong cash position is expected to fund operations into mid-2027, providing for continued development of the company’s promising pipeline.
6. ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD)
Share Price as of January 8: $17.60
Number of Hedge Fund Holders: 35
ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is a biopharmaceutical company that is focused on developing innovative treatments for central nervous system (CNS) disorders. The company has made significant strides in addressing rare diseases, particularly with its FDA-approved therapies for Parkinson’s Disease Psychosis (PDP) and Rett Syndrome. ACAD ranks among the best medical stocks to buy according to hedge funds.
In the third quarter of 2024, ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) reported total revenues of $250.4 million, an 18% increase year-over-year. This growth was driven by strong sales of NUPLAZID, which generated $159.2 million, and DAYBUE, which contributed $91.2 million, up 36% year-over-year. These results reflect ACADIA Pharmaceuticals Inc.’s (NASDAQ:ACAD) successful commercialization strategies and the increasing demand for its products. The company’s flagship product, NUPLAZID, is the first and only treatment specifically approved for hallucinations and delusions associated with Parkinson’s disease psychosis. This unique positioning addresses a significant market. Additionally, in October, DAYBUE received marketing authorization from Health Canada for treating Rett syndrome, making it the first approved therapy for this condition in Canada.
On December 11, ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) completed the sale of its Rare Pediatric Disease Priority Review Voucher for $150 million. This financial boost is expected to support further research and development initiatives in CNS disorders and rare diseases.
5. Amicus Therapeutics Inc. (NASDAQ:FOLD)
Share Price as of January 8: $9.46
Number of Hedge Fund Holders: 38
Amicus Therapeutics Inc. (NASDAQ:FOLD) is an American biopharmaceutical company that specializes in developing and commercializing innovative treatments for rare diseases. The company’s primary focus is on orphan diseases, which often lack effective therapies, making its work vital for patients in need.
The company’s strategic focus on rare diseases positions it favorably within the medical market. Amicus Therapeutics Inc. (NASDAQ:FOLD) is advancing its work to establish leadership in treating both Fabry and Pompe diseases. The company has managed to significantly increase its revenues with a strong commitment to innovation and patient care.
In the third quarter of 2024, Amicus Therapeutics Inc. (NASDAQ:FOLD) reported total revenues of $141.5 million, marking a 37% increase year-over-year. The revenue from the company’s flagship product, Galafold, reached $120.4 million, up 20% compared to the previous year. Galafold is an oral treatment for Fabry disease that stabilizes a dysfunctional enzyme in patients with specific genetic variants. This product has demonstrated strong demand and market presence. Amicus Therapeutics Inc. (NASDAQ:FOLD) has also recently launched Pombiliti and Opfolda, a two-component therapy for Pompe disease, which generated $21.1 million in revenue during Q3 2024. This marks a 33% increase from the second quarter of 2024.
4. Elanco Animal Health Incorporated (NYSE:ELAN)
Share Price as of January 8: $11.55
Number of Hedge Fund Holders: 42
Elanco Animal Health Incorporated (NYSE:ELAN) is an American pharmaceutical and health company specializing in medicines and vaccinations for pets and livestock. The company is focused on improving animal health by developing innovative pharmaceuticals and health products to prevent and treat diseases in animals. ELAN ranks among the best medical stocks to buy under $20.
The company is strategically focused on streamlining its operations while also making progress with its innovative product pipelines. In July 2024, Elanco Animal Health Incorporated (NYSE:ELAN) completed the sale of its aqua business for approximately $1.3 billion. This transaction is aimed at simplifying the company’s business while improving its financial flexibility.
Elanco Animal Health Incorporated (NYSE:ELAN) has also recently received US FDA approvals for two significant products. Zenrelia is a JAK inhibitor for treating pruritus and atopic dermatitis in dogs and it was launched in late September 2024. Credelio Quattro is the first and only parasiticide for dogs to protect against fleas, ticks, heartworms, roundworms, hookworms and three different species of tapeworm, and is expected to launch in early 2025. These product launches are expected to contribute positively to Elanco Animal Health Incorporated’s (NYSE:ELAN) growth in the animal health market.
3. Oscar Health Inc. (NYSE:OSCR)
Share Price as of January 8: $15.29
Number of Hedge Fund Holders: 45
Oscar Health Inc. (NYSE:OSCR) is a leading healthcare technology company that integrates medical services and plans with a strong technology platform. As one of the best medical stocks to buy, the company offers a variety of health insurance products and services. Oscar Health Inc. (NYSE:OSCR) serves more than 1.6 million members, providing individual and family health plans alongside innovative health technology solutions through its +Oscar platform.
The company is leveraging advanced technology to improve its operations and improve healthcare delivery. Longleaf Partners, managed by Southeastern Asset Management, likes the stock particularly because of its long-term growth potential. Longleaf Partners is confident that Oscar Health Inc. (NYSE:OSCR) is poised to become a crucial part of the US healthcare system.
The company is strategically focused on growing its business. In October 2024, Oscar Health Inc. (NYSE:OSCR) unveiled an exciting expansion plan for 2025, aimed at making its health insurance offerings available in 504 counties across 18 states. This move is expected to enhance access to the company’s services for more individuals and families, positioning Oscar Health Inc. (NYSE:OSCR) for strong growth in the coming years.
Financially, the company reported impressive results for Q3 2024. Total revenues reached $2.4 billion, a remarkable 68% increase from the same quarter in the previous year. Oscar Health Inc. (NYSE:OSCR) expects to maintain strong growth momentum, targeting a compound annual growth rate (CAGR) of at least 20% in revenue and a 5% operating margin by 2027.
2. Roivant Sciences Ltd. (NASDAQ:ROIV)
Share Price as of January 8: $11.02
Number of Hedge Fund Holders: 50
Roivant Sciences Ltd. (NASDAQ:ROIV) is an American multinational healthcare company that focuses on improving drug development through innovative technology. The company operates a unique model where it creates subsidiaries, known as “Vants,” to develop and commercialize a variety of solutions. With an aim to improve patient outcomes by accelerating the delivery of effective medicines, ROIV ranks among the best medical stocks to buy.
Tourlite Capital Management, an investment management firm, has a positive outlook on Roivant Sciences Ltd. (NASDAQ:ROIV). Tourlite Capital likes the stock because of the company’s pipeline programs that have seen positive developments recently. In its third-quarter 2024 investor letter, the management firm expressed confidence that progress on programs like mosliciguat and IMVT-1402 could reveal the true potential of Roivant Sciences Ltd.’s (NASDAQ:ROIV) platform.
The company has an impressive pipeline, featuring a range of advanced treatments. Notably, IMVT-1402, a monoclonal antibody targeting autoimmune diseases, has cleared five Investigational New Drug (IND) applications and is on track to start a pivotal trial for difficult-to-treat rheumatoid arthritis by March 31, 2025.
Another key program is mosliciguat, which Roivant Sciences Ltd. (NASDAQ:ROIV) introduced in September 2024. Mosliciguat is an innovative inhaled medication designed for once-daily use and acts as a soluble guanylate cyclase (sGC) activator to treat pulmonary hypertension associated with interstitial lung disease (PH-ILD). Around 200,000 patients in the US and Europe are affected by this condition, which currently has limited or no effective treatment options.
1. Viatris Inc. (NASDAQ:VTRS)
Share Price as of January 8: $11.96
Number of Hedge Fund Holders: 57
Viatris Inc. (NASDAQ:VTRS) is a global pharmaceutical and healthcare company. With a goal to improve access to quality medicines, it serves more than 165 markets and territories around the globe. The company offers a variety of medicines, including branded prescription drugs, generics, vaccines, and medical devices. Viatris Inc. (NASDAQ:VTRS) ranks among the best medical stocks to invest in.
Viatris Inc. (NASDAQ:VTRS) continues to expand its product offerings through strategic partnerships. In October 2024, it entered an exclusive licensing agreement with Lexicon Pharmaceuticals for sotagliflozin outside the US and Europe. This agreement enhances the company’s cardiovascular portfolio.
The company is strategically focused on launching new products to grow its business. In the third quarter of 2024, Viatris Inc. (NASDAQ:VTRS) reported total revenues of $3.8 billion, with new product revenues accounting for $133 million. The company expects to generate between $500 million and $600 million from new products in 2024. This growth will be supported by the successful launch of innovative treatments like Breyna and lisdexamfetamine.
Overall, VTRS ranks first among the 12 best medical stocks to buy under $20. While we acknowledge the potential of medical companies, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than VTRS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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