In this article, we discuss the 5 cheap healthcare stocks to invest in. If you want to read a detailed analysis of the healthcare industry, go directly to 11 Cheap Healthcare Stocks To Invest In.
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. (NASDAQ:PDCO) 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. (NASDAQ:PDCO) 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. (NASDAQ:AMPH) 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. (NASDAQ:AMPH)’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. (NASDAQ:AMPH) 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. (NASDAQ:INMD) 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. (NASDAQ:INMD). 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. (NASDAQ:PINC) 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. (NASDAQ:PINC) 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.
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