We recently published a list of 10 Best Healthcare Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Johnson & Johnson (NYSE:JNJ) stands against other best healthcare stocks to invest in.
Healthcare stocks experienced a challenging year in 2024, lagging behind high-growth sectors like tech and AI. Market uncertainties and policy challenges also created obstacles for certain segments within the industry. In the first half of the year, investors focused on technology and communication services, drawing attention away from healthcare. While the sector showed some improvement in the latter half as the market rally expanded, certain segments continued to struggle with supply and demand imbalances caused by the pandemic. One major factor was the increased demand for delayed medical procedures, as patients sought treatments they had postponed. This benefited healthcare facilities and medical device manufacturers but put financial pressure on managed-care insurers.
Additionally, companies specializing in life sciences tools and services faced lower demand, as COVID-19 testing declined and pandemic-related inventory levels were still being reduced. Policy concerns also weighed on the sector, particularly for insurers offering Medicare Advantage plans, as reimbursement rates fell short. Uncertainty surrounding upcoming elections further contributed to the healthcare sector’s struggles. On a positive note, innovation remained strong, as the biotech industry saw promising clinical developments, and advancements in treatments for conditions like obesity and diabetes fueled significant growth in the pharmaceutical sector.
In the first quarter of 2025, healthcare stocks were among the strongest performers in the S&P index, outpacing the broader market. This marks a sharp contrast to their struggles in recent years. In 2024, the healthcare sector saw a modest gain of 2.06%, trailing the market’s 25.02% return. A similar pattern was seen in 2023, with healthcare stocks rising just 2% while the overall market climbed 26%. Despite these challenges, healthcare remains a vital part of the economy, driven by increasing demand for medical products and services as the population ages. It is the fourth largest sector in the market, following technology, financials, and consumer discretionary. In the Russell MidCap Index, which tracks about 800 companies, healthcare ranks fifth, while in the small-cap Russell Index, it holds the third spot behind industrials and financials. Rob Haworth, senior investment strategy director for US Bank Asset Management, said:
“Investors can gain exposure to the healthcare sector by owning the S&P 500 through a passively managed index fund or ETF. Investors may also want to take a more selective approach, as the record demonstrates there can be varied performance within the healthcare sector.”
Investors are taking a cautious approach as they assess potential policy shifts under the new administration. With a change in leadership at the Department of Health and Human Services, major healthcare companies could face greater scrutiny and may need to adjust to evolving policies.
As the Trump administration’s policies come into focus, concerns are emerging over potential budget cuts that could directly affect healthcare organizations. With the Department of Government Efficiency tasked with cutting $1 trillion from a $6 trillion budget, reductions in healthcare spending appear likely. On January 17, the House Ways and Means Committee released a list of possible cuts to support the extension of the 2017 Tax Cuts and Jobs Act. Among the proposals are eliminating the tax-exempt status of municipal bonds and potentially revoking the nonprofit status of hospitals and health systems. At the same time, hospital mergers and acquisitions have been steadily rebounding from pandemic-era lows, despite strict federal antitrust policies. However, it remains to be seen how future changes in regulatory leadership might influence M&A activity.
Despite policy concerns, some billionaire investors remain confident in the healthcare sector’s future. Carl Cook, with an estimated net worth of $10.3 billion, is among the wealthiest figures in the healthcare industry. He took over as CEO of his family’s medical device company in 2011 following his father’s death. In 2017, the company sold one of its subsidiaries to a drug delivery technology firm for $950 million. Cook also serves as president of a life sciences division focused on developing a cell therapy for urinary incontinence. Another billionaire investor in the healthcare sector is Ronda Stryker, with a net worth of $8.4 billion. Known for her contributions to medical technology and philanthropy, she has played a major role in advancing healthcare innovation. As the granddaughter of Dr. Homer Stryker, founder of a medical technology firm, she is committed to improving lives through medical advancements and social initiatives.
A smiling baby with an array of baby care products in the foreground.
Our Methodology
To collect data for this article, we scanned Insider Monkey’s database of billionaires’ stock holdings and picked the top 10 companies operating in the healthcare sector with the highest number of billionaire investors in Q4 of 2024. The stocks are ranked in ascending order based on the number of billionaire investors. We have also mentioned the value of billionaire holdings for further insight.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Johnson & Johnson (NYSE:JNJ)
Number of Billionaire Investors: 18
Value of Billionaire Holdings: $2.9 billion
Johnson & Johnson (NYSE:JNJ) conducts research, develops, manufactures, and sells a range of healthcare products worldwide, operating through its Innovative Medicine and MedTech segments. On March 21, JNJ announced plans to invest over $55 billion in US manufacturing, research, development, and technology over the next four years, a 25% increase from the previous investment period. The company projects that these investments will contribute more than $100 billion annually to the US economy. As part of this expansion, Johnson & Johnson (NYSE:JNJ) will build three advanced manufacturing facilities in addition to an existing site in North Carolina.
In 2024, Johnson & Johnson (NYSE:JNJ) saw a 7% increase in operational sales, excluding its COVID-19 vaccine. SPRAVATO surpassed $1 billion in annual sales, bringing the firm’s total number of billion-dollar revenue platforms to 26. Its Innovative Medicine segment exceeded $14 billion in sales for the third consecutive quarter, with 10 brands achieving double-digit growth. In Q4 2024, JNJ’s net earnings amounted to $3.4 billion. By the end of 2024, the company held around $25 billion in cash and marketable securities, with $37 billion in debt, resulting in a net debt position of about $12 billion. A strong focus on cash flow helped JNJ generate approximately $20 billion in free cash flow in 2024, an increase of $1.6 billion compared to 2023.
On March 25, Johnson & Johnson (NYSE:JNJ) introduced the FDA-cleared Dualto energy system, a surgical platform that integrates multiple energy modalities for open and minimally invasive procedures. Designed to work with the company’s Polyphonic Fleet software for device management, Dualto offers an advanced surgical solution. Looking ahead, JNJ plans to integrate Dualto with its highly anticipated Ottava surgical robot.
Johnson & Johnson (NYSE:JNJ) is considered one of the best healthcare stocks, attracting investments from 18 billionaires.
Overall, JNJ ranks 4th on our list of the best healthcare stocks to buy according to billionaires. While we acknowledge the potential of JNJ to grow, our conviction lies in the belief that certain 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 JNJ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.