11 Cheap Healthcare Stocks To Invest In

Published October 5, 2022 at 9:25 am EDT Updated August 19, 2026 at 8:36 am EDT

In this article, we discuss the 11 cheap healthcare stocks to invest in.

Healthcare is one of the biggest sectors in the world. According to a research report, the healthcare consumer market size was $332.391 billion and is expected to reach $667.37 billion by 2028. In 2020, the healthcare sector accounted for 19.7% of the US GDP and the healthcare expenditure was about $4.1 trillion or $12,530 per person. According to Deloitte, the US healthcare expenditure is expected to more than double to $8.3 trillion in 2040.

In the past year, the healthcare services industry has gained 7.7%, and its earnings are expected to grow by 14% annually. However, as of October 3, the sector has declined by 1.3% in the last week. At the time of writing, the industry is trading at a 24.6x PE ratio compared to the 3-year average of 22.2x.

When talking about healthcare stocks, large companies like UnitedHealth Group Incorporated (NYSE:UNH), Johnson & Johnson (NYSE:JNJ), and Eli Lilly and Company (NYSE:LLY) steal the spotlight. However, in this article, we will discuss the cheap healthcare stocks in these times of inflation and global economic headwinds.

Photo by National Cancer Institute on Unsplash

Our Methodology

After a careful assessment of the healthcare sector, we picked these stocks based on their fundamentals, financial strength, analyst ratings, and dividend history. All of the stocks mentioned in the article are priced below $35 as of October 3.

The hedge fund sentiment around some of the stocks has also been added which was taken from Insider Monkey’s database of 895 elite hedge funds at the end of Q2 2022.

11 Cheap Healthcare Stocks To Invest In

11. AbCellera Biologics Inc. (NASDAQ:ABCL)

Price as of October 3: $10.25

AbCellera Biologics Inc. (NASDAQ:ABCL) is a Canadian biotechnology company that operates an AI-powered antibody discovery platform. As of the second quarter of 2022, 17 hedge funds had a stake in the company. Baker Bros. Advisors is the most prominent shareholder. The fund owned over 10.45 million shares, worth $111.29 million.

AbCellera Biologics Inc. is one of the best health stocks due to its multiple revenue streams. The company generates revenues through optional investment shares, licensing, milestone payments, and research fees. However, the largest revenue stream is generated through royalties from successful drugs. Currently, the company maintains approximately 74% gross margins and close to 40% net profit margins. Additionally, the mid-cap company holds $1 billion in cash and cash equivalents and no debt as of the latest June quarter.

On August 10, Credit Suisse analyst Tiago Fauth maintained an Outperform rating on AbCellera Biologics Inc.’s shares and lowered the price target to $34 from $40. The analyst mentioned that the company added six programs under contract and started discovery on an additional four, which brings up the cumulative program starts to 88.

AbCellera Biologics Inc. is an affordable stock unlike expensive names like UnitedHealth Group Incorporated, Johnson & Johnson, and Eli Lilly and Company.

10. Koninklijke Philips N.V. (NYSE:PHG)

Price as of October 3: $15.51

Koninklijke Philips N.V. (NYSE:PHG) is a Dutch medical devices company. It operates through three segments; diagnosis and treatment, connected care, and personal health.

Koninklijke Philips N.V. is one of the best healthcare stocks because of its strong focus on shareholder returns. The company pays dividends annually and as of October 3, the company has a yield of 5.88%. The next estimated dividend payout date is June 9, 2023. However, it has to be kept in mind that the Netherlands has a dividend withholding tax of 15% which lowers the dividend yield due to the dilution of shares as the shareholders prefer their dividends in form of shares rather than cash. Nonetheless, the company consistently repurchases its outstanding shares and has spent $5 billion on share repurchases since 2017.

Koninklijke Philips N.V. is also a good addition to investor portfolios as it has penetrated a market with obstructed entrance. The company has only two other competitors and has steady subscription services for some of its products, generating some strong recurring revenues for the company.

On September 12, Societe Generale analyst Delphine Le Louet upgraded Koninklijke Philips N.V. shares to Buy from Hold and lowered the price target to EUR 21 from EUR 22.40. The analyst believes that the company’s current share price “more than discounts the bad news.”

Here is what Artisan Partners had to say about Koninklijke Philips N.V. in its Q4 2021 investor letter:

“In the health care sector, our biggest detractor was Philips. Philips was a Q3 purchase. After exiting more consumer-focused businesses such as TV and lighting over the past decade, Philips has become a health care technology company operating across three main areas: diagnosis and treatment, connected care, and personal health. Shares came under pressure due to a recall of its first-generation CPAP machine for sleep apnea and fears regarding potential litigation. This created our opportunity to get involved. However, following our initial purchase, shares fell further in November after the FDA provided an update on the device recall and delineated deficiencies identified from an inspection of the device’s main manufacturing facility, which in itself is not unusual. Investors’ key sources of concern likely center around the recall expanding to additional products, the potential for legal recourse, and potential market share losses arising in the sleep division. Nonetheless, the sleep division is a small part of the overall business—which we do not believe is going to zero. The company has a large installed base of medical diagnostic equipment (e.g., MRI/PET/CT/ultrasound scanners) that offers a high recurring stream of software-like maintenance revenues. This is a sticky business as medical providers are reluctant to switch over to competitors. We believe shares have been overly penalized, so we added to our position on weakness.”

9. Abcam plc (NASDAQ:ABCM)

Price as of October 3: $15.68

Abcam plc (NASDAQ:ABCM) is a UK-based company that focuses on the production and distribution of protein research tools. The company identifies, develops, and distributes tools for scientific research, diagnostics, and drug discovery.

Abcam plc (NASDAQ:ABCM) is one of the best healthcare stocks due to its healthy growth in recent years. The company’s revenues in FY2019 were 259.9 million GBP and reached 315.4 GBP in 2021. In the first half of 2022, the company recorded a revenue of 185.2 million GBP, projected at 371 million GBP for the full year. Abcam plc (NASDAQ:ABCM) management also updated its guidance for the year 2024 and is committed to generating 450-525 million GBP in FY24.

On September 14, RBC Capital analyst Charles Weston reiterated an Outperform rating on Abcam plc (NASDAQ:ABCM)’s shares with 2,200 GBP, up from 1,700 GBP.

8. Exelixis, Inc. (NASDAQ:EXEL)

Price as of October 3: $16.35

Exelixis, Inc. (NASDAQ:EXEL) is a California-based biotechnology company, primarily focusing on oncology.

Exelixis, Inc. holds a healthy balance sheet because of its portfolio of drugs. The company has a cash position of $2 billion after $100 million was added in the latest June quarter. The company’s flagship product, cabozantinib, remains to be the tyrosine kinase inhibitor of choice for renal cell carcinoma. Its sales have been growing for 7 consecutive quarters and is experiencing market share improvements sequentially. The TKI had a 37% market share in Q2 2022. Due to expected competition in the future, the company is also adding new products to its pipeline.

On August 10, Cowen analyst Yaron Werber maintained an Outperform rating on Exelixis, Inc.’s shares and raised the price target to $26 from $24. According to the analyst, the recent results of the company were a low-quality beat and the unchanged guidance reflects a growth outlook for 2H22.

7. R1 RCM Inc. (NASDAQ:RCM)

Price as of October 3: $18.85

R1 RCM Inc. (NASDAQ:RCM) provides end-to-end revenue cycle management services to health care providers in the US. According to our database, 30 hedge funds were bullish on the company at the end of Q2 2022. McKinley Capital Management was the most prominent stakeholder in the quarter with 292,270 shares, worth $6.126 million.

R1 RCM Inc. made it to the list of one of the best healthcare stocks to invest in because of its recent acquisition of CloudMed. Prior to the acquisition, the company covered 95% of the client NPR and had a 5% leakage due to limited capabilities around covering complex and smaller dollar claims. On the other hand, CloudMed targets the remaining 5% leakage leaving no costs or complexity issues for R1 RCM Inc..

On September 15, KeyBanc analyst Scott Schoenhaus initiated coverage of R1 RCM Inc. with an Overweight rating and a $30 price target. According to the analyst, with its fundamentals, the company is “strategically positioned an outsourcing pure-play,” He views it as “a beat-and-raise story” in the future.

6. REGENXBIO Inc. (NASDAQ:RGNX)

Price as of October 3: $24.17

REGENXBIO Inc. (NASDAQ:RGNX) is a clinical-stage biotechnology company that provides gene-therapy products.

REGENXBIO Inc. is one of the best healthcare stocks because of its future growth prospects of two products in its 5×25 strategy. According to the 5×25 strategy, the company intends to launch five gene therapies by 2025. The first product that the company is advancing is RGX-121 for the treatment of Mucopolysaccharidosis II. Upon approval, the company will enter the $4.7 billion Mucopolysaccharidosis market in 2024. The MPS market is still growing at a CAGR of 10%.

The bellwether of the company’s product pipeline remains to be RGX314, which is being developed for wet age-related macular degeneration. The company recently received a $1.38 billion partnership deal with AbbVie Inc. (NYSE:ABBV) for RGX314’s commercialization and development. The global market for macular edema and macular degeneration market was valued at $8.3 billion in 2020 and is expected to reach $16.5 billion by 2030.

In the last three months, 5 analysts have covered REGENXBIO Inc. and given an average of Moderate Buy rating. The price target average is $48, which shows a 98.59% upside to its current share price.

UnitedHealth Group Incorporated, Johnson & Johnson, and Eli Lilly and Company are some of the best healthcare stocks along with REGENXBIO Inc..

5. Patterson Companies, Inc. (NASDAQ:PDCO)

Price as of October 3: $25.17

Patterson Companies, Inc. (NASDAQ:PDCO) is a medical supplies company primarily focused on veterinary and delta health products. At the end of Q2 2022, 20 hedge funds maintained a stake in the company with a combined value of $167.7 million. In the previous quarter, 18 hedge funds were bullish on the company with investments valued at $143.7 million.

As of October 3, Patterson Companies, Inc. has a dividend yield of 4.11% compared to the 1.58% healthcare industry average. The company has a payout ratio of 45.68%. The latest quarterly dividend of $0.26 was declared on September 13, payable by November 4 to the shareholders of record on October 21.

On September 1, Piper Sandler analyst Jason Bednar reiterated an Overweight rating on Patterson Companies, Inc. shares and lowered the price target to $40 from $42 post Q1 results. The analyst added that despite the lower-than-expected dental and operating margin percentages, he still likes the risk/reward profile of the company.

Here is what Heartland Advisors had to say about Patterson Companies, Inc. in its Q2 2021 investor letter:

“Patterson Companies Inc. (PDCO) is a leading distributor of dental and animal health products. Sales have been on the rise and the company reported a record $6.1 billion in revenue for the year ending in April. Shares of the business are up double digits through the first half of the year, and the holding has been a solid contributor to performance.

Management at Patterson has done an impressive job of expanding operating margins and making strategic acquisitions that have fit with the business’ core competencies since coming aboard in 2017. However, shares set back late in the quarter, after the company reported better than expected earnings but issued guidance that was more conservative than Wall Street expectations. Due to the ongoing unwinding of pent-up demand in dental services and the strength of Patterson’s animal health line, we believe recent earnings guidance will prove to be overly cautious.

We view recent softness in shares of Patterson as an overreaction and remain constructive on this industry leader that is priced at just .5X sales.”

4. Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH)

Price as of October 3: $28.40

Amphastar Pharmaceuticals, Inc. (NASDAQ:AMPH) is a diversified pharmaceutical company that mainly focuses on inhalation and intranasal products for a wide range of health problems. The company also manufactures and sells injectables, biosimilars, complex generic, and proprietary products. As of October 3, the company stock price is up by 23.10% on a YTD basis.

Amphastar Pharmaceuticals, Inc. is one of the best health care stocks due to its strong financial performance and future growth prospects. Since Q3 2020, the company’s revenue has grown at 7.7% quarterly and EPS recorded a 37% growth. Furthermore, the company has 12 Abbreviated New Drug Applications (ANDAs) in progress which provide the company with a revenue growth potential of over $14 billion. Amphastar Pharmaceuticals, Inc.’s two drugs, generic ganirelix and vasopressin, have a total addressable market of $850 million and are forecasted to accelerate the company’s revenue growth by approximately 50%.

On July 29, Capital One analyst Tim Chiang initiated coverage of Amphastar Pharmaceuticals, Inc. with an Overweight rating and a $44 price target.

3. InMode Ltd. (NASDAQ:INMD)

Price as of October 3: $30.23

InMode Ltd. (NASDAQ:INMD) is an Israeli medical devices company that manufactures and sells minimally invasive aesthetic medical products.

InMode Ltd. has sustained over 80% gross margins for the past few years and the TTM FCF was 45% of the revenue at $181 million. Furthermore, the company’s future revenue growth also seems to be stable as the management claims that it serves 100,000+ customers in the US and 200,000+ internationally. In addition, the company holds solid pricing power due to its Radiofrequency Assisted Lipolysis, a fat loss procedure, which doesn’t have much competition in the market.

As of the second quarter of 2022, 27 hedge funds held positions in InMode Ltd.. Jim Simons’ Renaissance Technologies was the most prominent stakeholder in the company with over 3.1 million shares, worth $69.477 million.

2. GSK plc (NYSE:GSK)

Price as of October 3: $30.25

GSK plc (NYSE:GSK) is one of the world’s largest pharmaceutical companies. In August 2022, it had the 8th largest market cap on the LSE at 70 billion GBP.

GSK plc (NYSE:GSK) has been paying dividends since 1988. As of October 3, the company has a dividend yield of 5.17% and a healthy and sustainable payout ratio of 48.19%. The latest quarterly dividend of $0.39 was declared on July 27, payable by October 6 to the shareholders of record on August 19.

On September 29, Oddo BHF analyst Martial Descoutures upgraded GSK plc (NYSE:GSK) to Outperform from Neutral with a 1,700 GPB price target.

According to the Insider Monkey database, GSK plc (NYSE:GSK) was a part of 34 hedge fund portfolios with a combined stake value of $2.378 billion. In the previous quarter, 33 hedge funds held a position in the company, valued at $2.316 billion.

1. Premier, Inc. (NASDAQ:PINC)

Price as of October 3: $34.43

Premier, Inc. (NASDAQ:PINC) is an American healthcare improvement company. The company primarily focuses on healthcare supply chains and performance services.

Premier, Inc. is one of the best healthcare stocks because of its financial performance, valuation, and low risk. As of Q2 2022, the company recorded gross margins of 55.97% and free cash flow margins of 29.66%. Additionally, the 3-year sales growth of the company was recorded at 13%. The company has a PE ratio of 14 compared to the S&P 500’s of approximately 15. Finally, the company has a low debt to equity ratio of 0.27, and a 5-year monthly beta of 0.35 which makes it a low-risk stock.

Canaccord analyst Richard Close remains bullish on Premier, Inc. and said that the company continues to be a safe name with decent revenue visibility. The analyst believes that the company has a strong competitive position and solid free cash flow profile. On August 17, Close reiterated a Buy rating on the company shares and raised the price target to $46 from $44.

You can also take a look at 11 Best Dividend Paying Stocks Under 50 Dollars and 10 Best Cybersecurity Stocks To Buy Under $20

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