Top 5 Healthcare Stocks Right Now

TL;DR

Healthcare stocks have underperformed the broader market, but there is a split within the sector, with smaller biotech names outperforming. The healthcare sector is trading at attractive valuations and could see a boost in earnings growth this year.

Transcript

stocks in the healthcare sector are some of the cheapest in the market and there's reason to believe this group could be the best to buy in 2021. in this video i'll detail why i think healthcare stocks could boom this year and then reveal the five i'm watching to outperform the market we're talking top health care stocks to buy today on let's talk ... Read More

Key Insights

• 😣 The healthcare sector has seen a split in performance, with biotech stocks outperforming and the rest of the sector underperforming.
• ❓ Valuations for healthcare stocks are attractive compared to other sectors, providing an investment opportunity.
• 💪 As the healthcare sector recovers from the impact of the pandemic, companies are expected to report strong earnings growth, which could drive stock prices higher.
• 👀 Medtronic, Becton Dickinson, Gilead Sciences, Boston Scientific, and Thermo Fisher Scientific are highlighted as potential healthcare stocks to watch for potential outperformance.

Questions & Answers

Q: Why have healthcare stocks underperformed the broader market?

Healthcare stocks have underperformed due to a split within the sector. While biotech stocks have experienced significant gains, the rest of the sector, including medical device makers, large drug makers, and insurance companies, have underperformed.

Q: How has the COVID-19 pandemic impacted healthcare companies?

The pandemic led to a decline in profits for healthcare companies as they had to prioritize critical services and postpone or cancel elective surgeries. This impacted the profitability of medical device makers, instrument manufacturers, and large drug makers.

Q: Why are valuations for healthcare stocks attractive?

Healthcare stocks are trading close to their 10-year average price-to-earnings ratios, making them relatively cheaper compared to other sectors. This provides an opportunity for investors to buy healthcare stocks at a reasonable price.

Q: How might healthcare stocks benefit from earnings growth this year?

Healthcare companies are expected to report significant earnings growth this year due to easy comparables from the previous year's decline in earnings. This could boost investor sentiment and drive healthcare stocks higher.

Summary & Key Takeaways

• Healthcare stocks in the market have returned around 10%, underperforming the broader market's 14.3% return. However, this performance conceals a split within the sector, with biotech stocks performing well and the rest of the sector underperforming.

• The COVID-19 pandemic led to a decline in profits for healthcare companies, particularly those involved in elective surgeries and other non-critical services. As the situation improves, healthcare stocks could experience a rebound in profits.

• Valuations for healthcare stocks are attractive compared to other sectors, with the healthcare sector trading close to its 10-year average price-to-earnings ratio. Additionally, healthcare companies are expected to report significant earnings growth this year, which could drive investor sentiment.