What are the top healthcare stocks to buy in 2021?
With the pandemic still causing problems around the globe, healthcare companies are seeing a heavy load of demand.
That means healthcare stocks have been the talk of the town this past year. The sector has been through a lot.
All that buzz has died down a bit for now. But that doesn’t mean healthcare stocks aren’t worth trading anymore.
Healthcare will always have a place in the world, making the sector an important one to keep an eye on.
Table of Contents
- 1 What Are Healthcare Stocks?
- 2 Top Healthcare Stocks to Watch for 2021
- 3 Different Types of Healthcare Stocks
- 4 What Makes a Good Healthcare Stock?
- 5 What Are the Risks of Trading and Investing in Healthcare Stocks?
- 6 Top 3 Value Healthcare Stocks
- 7 Frequently Asked Questions About Healthcare Stocks
- 8 Healthcare Stocks: Conclusion
- 9 One Platform. One System. Every Tool
What Are Healthcare Stocks?
Any company involved in providing healthcare services is a healthcare stock.
This means hospitals, physician practices, mask makers, insurance companies, and more.
The world spends almost $8 trillion every year on healthcare. The U.S. accounts for nearly half of that.
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Top Healthcare Stocks to Watch for 2021
The healthcare sector is massive with tons of awesome stocks.
These four aren’t the only ones worth watching. But I think they’re really interesting stocks that could make a strong run for the remainder of 2021 … And it could help you find your own healthcare stocks as you make your watchlists.
Quick note: some of these stocks are a bit higher priced. So that may put you off.
But here’s a tip I have for stocks like this: the rule of 10. You take a higher-priced stock and move the decimal point over one place or more … You mentally turn a $100 stock into a $10 stock.
This is NOT something I recommend for every stock. But for higher-priced stocks, it can be a helpful hack.
And some of these stocks could make for great potential swing trades. I love those slow grinders.
Healthcare Stock #1: UnitedHealth Group Incorporated (NYSE: UNH)
UnitedHealth is the largest health insurance company in the world. It runs one of the biggest pharmacy benefit managers — OptumRx.
UnitedHealth’s umbrella covers about 46 million people in America and eight million more around the globe.
Healthcare companies like United are starting to use predictive analytics to help find the people most at risk of developing health issues.
This flips the script of the healthcare sector being reactive instead of proactive. It could also potentially save everyone money in the process…
And speaking of money, UNH makes a lot of it. It consistently performs well. It shows no signs of slowing down anytime soon.
Healthcare Stock #2: Boston Scientific Corporation (NYSE: BSX)
Boston Scientific has a $62 billion market cap, but it isn’t a highly discussed healthcare stock…
BSX is in the minimally invasive medical devices game. It makes products for endoscopy, cardiology, urology, and more.
The company recently had European approval to release a single-use tool for procedures. It’s also received strong feedback after 12 months of testing a stroke reduction device.
In June, Boston Scientific acquired the remaining shares of Farapulse, Inc. This gives BSX access to unique technology for treating cardiac arrhythmias (abnormal heart rates or rhythms).
BSX is up 24% this year and continues to chug upward…
Healthcare Stock #3: Intuitive Surgical, Inc. (NASDAQ: ISRG)
Robotics is increasingly used in surgery, and Intuitive Surgical plays an important role in that.
Until robots develop some level of consciousness, I’d take the precision of a programmed robotic arm over even the steadiest human hand…
Intuitive’s da Vinci robot has been utilized for over 20 years and continues to improve. As technology advances, surgery becomes safer.
With lockdowns loosening across America, elective surgeries are coming back … and that’s a big part of what Intuitive does.
ISRG is up 38% since March…
Healthcare Stock #4: NovoCure Limited (NASDAQ: NVCR)
NVCR is up over 250% this past year. I don’t like to chase the tail of a super hot stock like this unless I see more upside in it…
NovoCure is an oncology company seeking to attack the most aggressive forms of cancer. It aims to destroy tumor cells while saving healthy tissue. This can offset some of the negative side effects of common cancer treatments.
NovoCure has three FDA-approved treatments and four more soon to come…
NVCR had a big sell-off coming into July after some poor feedback in one of its trials. But one poor report shouldn’t spoil everything else the company is doing.
From a trading perspective, that level of a sell-off could make for a better entry point…
Different Types of Healthcare Stocks
The healthcare sector breaks down into four categories…
This is where you’ll find drug companies that work to treat or beat illnesses and diseases.
There are two types of drugmakers: biotechs and pharmaceuticals. Biotechs use bacteria and enzymes to develop drugs while pharmaceuticals use chemicals.
There’s a vast range of drug stocks. Some have many successful drugs on the market … Others are still looking for their first.
The pharmaceutical industry rakes in over $1 trillion a year. Some companies produce small quality-of-life enhancers while others kill or treat diseases. That has a huge impact on humanity so these stocks can pick up a lot of momentum when things go right…
Medical Device Stocks
Next time you’re in a doctor’s office or hospital, look around … You’ll see lots of devices.
A medical device is anything from disposable gloves to the machine pumping medicine into your arm.
Drugs get a lot of credit for saving lives, but medical devices play a huge part too.
Health insurers and pharmacy benefit managers (PBM) play a vital role in the American healthcare system. They make it so the typical doctor’s visit doesn’t cost hundreds of dollars and a hospital visit doesn’t cost thousands…
Patients pay a premium, copay, or deductible, depending on the plan … and the insurer covers the rest.
PBMs give out drug benefits to employers and health plans. They help consumers save money by acting as a middle-man between the drugmakers and drugtakers.
Healthcare is expensive, but PBMs seek to limit the financial burden on insurance companies … and, more importantly, us common folk.
In countries where healthcare is a private industry, they’re a must-have … which makes them a must-watch for stock traders.
Healthcare Provider Stocks
This one is pretty self-explanatory … Any company providing healthcare services.
That means hospitals, practices, home health companies, and long-term care facilities.
The services these companies provide are necessities for every culture around the world. Identifying business staples can help you narrow down to the stocks worth trading.
What Makes a Good Healthcare Stock?
Healthcare stocks are no different than other stocks. Most of their successes or failures can be attributed to four main tentpoles…
Not everyone loves trading junk penny stocks. So for some traders, growth is important. It’s also important in healthcare because there’s a lot of competition.
This ties into growth … If a company isn’t making money, is there a good reason why?
Some companies aren’t profitable because they funnel their cash into growth opportunities. That can be good, but it doesn’t guarantee growth.
For traders, a balance sheet doesn’t always matter much. But understand why the market likes — or dislikes — a stock. A strong financial situation can lead to strong momentum.
Stock valuation can be key to determining where a stock may go in the future. If future success is already baked into the price, it may not be worth trading.
Luckily, traders don’t have to worry about the future as much. But knowing how the market sees a stock can help you gauge where it may go in the short term.
Who doesn’t like ‘free’ money?
Again, traders don’t need to worry about this too much, but dividends make stocks more appealing. This means the market can often gravitate towards a stock that pays dividends…
A company that pays dividends also means it has money to spend. That can show that a company is in good shape.
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What Are the Risks of Trading and Investing in Healthcare Stocks?
Before outlining the risks of trading healthcare stocks, remember that risk is baked into any trade. If there was no risk in trading, everyone would do it — and well.
Risk separates good traders from bad traders. Good traders know risk is inevitable and that there’s a chance for failure. Learning from your mistakes helps you properly measure risk over time…
But remember: higher-risk stocks can mean more rapid movement. Seasoned traders learn to use this risk to their advantage. Risky plays can mean quick money in a day or swing trade.
For example, penny stocks can jump tens or hundreds of percent in a short time … up or down.
My lists always focus on bigger and better performers that can make strong runs. We discuss penny stocks at StocksToTrade so you know what you’re getting into.
Competition and the FDA are the biggest concerns for anyone looking to trade healthcare stocks.
Companies compete to get drugs onto the market. And within just a few years, a company can come out with a better drug that makes another company’s past home run obsolete almost instantly…
FDA approval can also send a healthcare stock to the moon or to the dirt. So can trials. Be aware of all these factors before jumping in, even if it’s just for a short time.
Top 3 Value Healthcare Stocks
Value stocks can excite the market. Here are three to watch in the healthcare sector…
Value Stock #1: DaVita Inc. (NYSE: DVA)
DaVita is the largest dialysis provider in the U.S. The company helps treat kidney disease.
Its nearly 19 PE ratio makes it the most expensive value stock of its category, but it might be worth it…
DVA has developed strong support over recent months and could be close to making a run at yearly highs.
Value Stock #2: The Cooper Companies, Inc. (NYSE: COO)
The market loves stocks like this … All it does is churn out a solid profit.
Rocking a PE ratio of less than 9 makes Cooper a solid value play. It’s returned over 16% this year and is pushing yearly highs…
COO manufactures medical devices and fertility products.
Value Stock #3: Cigna Corp. (NYSE: CI)
Cigna isn’t much different from UnitedHealth. It’s a massive health insurance provider that covers tens of millions of people around the globe.
With a PE ratio of less than 11, it’s attractive for stock pickers. When they pick, the upward wave can start building…
CI has been down since the middle of May, but it’s developing a strong line of support at about $232.
Frequently Asked Questions About Healthcare Stocks
What Are Healthcare Stocks?
Healthcare stocks are stocks involved in the healthcare industry. This means medical device makers, insurance companies, pharmacy benefit managers, hospitals, drugmakers, and more.
Should I Trade Healthcare Stocks?
Healthcare stocks can be risky to trade. If competition wasn’t enough of a concern, you also must consider the FDA’s role in approving drugs. Healthcare isn’t like other sectors where companies sell products to consumers. Products must pass rigorous testing, or healthcare providers or the government won’t accept them.
If you’ve been around long enough, you know I won’t just tell you what to do…
I’ll discuss the stocks that interest me and whether I see a good potential trade. I’ll share the stocks I’m looking at for the week every Sunday … Sign up for my no-cost weekly watchlist here!
But don’t just take my word for it. Do your own research. Make your watchlists, read the news, and study charts … Work to improve a little bit each day.
Healthcare Stocks: Conclusion
Healthcare plays a vital role in society. So healthcare stocks will always be relevant.
Don’t ignore a staple industry like healthcare, but know that there are risks too.
Do your research, study, build your watchlists … I can’t say that enough.
This list gives you guidelines about the sector. These stocks are worth watching, but don’t take their inclusion as the green light to throw a bunch of money at them.
Take the time to do some research and come up with a trading plan.
Following the news is also vital to finding worthwhile trades. At StocksToTrade, we find the news for you … With StocksToTrade’s Breaking News Chat, you’ll get the hottest market news that can supercharge stock moves. Grab your 14-day trial of STT + BNC today for just $17!
If big news breaks, you’ll be ready to chase some profits.
Like any industry, there’s risk in healthcare. That’s why the news matters so much. An FDA approval could launch a stock to the moon while a bad trial report could bury it…
The industry develops quickly though, and competition is always high. Competition pushes companies to perform better … All of that can mean more trading opportunities.
Consider including healthcare stocks in your watchlists and be ready to pounce if they pop.
How do you watch and trade healthcare stocks? Let me know with a comment below!