Should you invest in healthcare stocks? Well any investor looking to diversify their portfolio should at least consider getting into healthcare stocks. Afterall the industry is ubiquitous and demand is constant so investing in healthcare is relatively low risk. In this post we are going to look at some of the strongest and best healthcare stocks in the world including a pick of the best healthcare stocks in Canada, in the UK and in our pick of the best stocks in Europe.
Despite these concerns, the long-term forecast for the healthcare business looks to be quite good. Global demographic trends and technology advancements may open up enormous opportunities for the healthcare business while also providing attractive rewards for patient investors.
The worldwide healthcare sector is enormous. Afterall, the market extends to pretty much every man, woman and child alive, and demand is only growing as the global population increases. To put this into some numbers, the healthcare industry accounts for a staggering 18% of the Gross Domestic Product of the United States. It is expected to smash the $6 trillion mark by the end of 2028.
Meanwhile, the United Kingdom’s state operated National Healthcare System is the country’s single biggest employer (and one of the world’s largest employers) with around 1.2 million staff members.
Furthermore, the COVID-19 pandemic may have wrought unbridled destruction upon much of the world’s economy. But the healthcare sector came out of it in truly rude health and stocks are still riding high.
Basically, any investor who already has stocks in finance and energy should now think about adding healthcare to their portfolio.
The healthcare sector is pretty diverse and not all companies do the same thing. Let’s take a look at the different kinds of healthcare stocks that are out there.
These are companies who manufacture and develop pharmaceuticals and medicines ranging from paracetamol, to insulin to experimental vaccines.
These are companies who make, maintain and develop the equipment used in the medical profession. This can range from hospital beds to brain scanners all the way to pioneering technology like nanobots.
Of course, these are companies who provide health insurance. The market is particularly lucrative (and controversial) in the US but is fast growing globally.
Medical services companies are involved in tertiary services such as the operating of hospitals, provision of home care, and some treatments such as physiotherapy.
As we said, healthcare is a global necessity and will always be in demand. As such healthcare stocks tend to provide very sure and steady returns.
Furthermore, in the US the healthcare sector is growing faster than the rest of the economy and is set to grow further owing to an ageing population and an epidemic of chronic diseases. Even across Europe, healthcare is becoming increasingly privatised most perhaps notably in the UK.
Many see healthcare as a human right and there is serious political dissent regarding the spiralling costs. If the healthcare bubble bursts or if world governments reform the sector, this may well send stock values plummeting.
Sustaining growth can also be a challenge for some companies especially as patents expire. Additionally, there is a constant threat of disruption from new technology or medical breakthroughs that can render a practice or prodigy obsolete overnight.
Bausch Health Companies
Formerly Valeant, Bausch are the single largest healthcare stock in Canada (by market cap). The company generates most of its revenue from eye care products as well as smaller amounts from surgical solution.
Recent years have Bausch experience some legal issues from which it has not yet fully recovered – therefore this may be an optimal time to pick up some stock.
While Savaria is ultimately an industrial company, there purchase of the mobility product manufacturer Handicare in 2021 has bought them an entry into the Canadian healthcare sector.
With an ageing population and an ever increasing demand for stairlifts. The group is well poised and expected to double its revenue within the next 2 years.
Neighbourly Pharmacies operates over 170 community pharmacies across Canada. They have made a number of acquisitions in recent years as they begin to take on their big rival Metro.
With a forward dividend yield of 0.93% and a dividend payout ratio of 3.02%, this is a solid stock option.
The pharmaceutical giant AstraZeneca became a household name in the UK during the COVID-19 pandemic after becoming one of the first producers in the western world of COVID-19 vaccines.
With a market cap of £157 billion, this is a huge company and one that offers very steady returns for its shareholders.
Even though the UK essentially operates a socialised medical model, an increasing number of its functions are being contracted out to private companies in what critics feel is a worrying creep towards full privatisation.
Spire provides a number of healthcare functions in UK hospitals including diagnostics, inpatient care, and outpatient care. Their stock value will only soar if the UK does edge towards increasing reliance on private healthcare.
The French based Eurofins provides ‘drug discovery services’ to pharmaceutical companies worldwide. Nestled at the heart of the EU, Eurofins are well placed to take full advantage of the single market.
Healthcare stocks are a sound addition to any portfolio. Investing in healthcare is relatively low-risk and the best healthcare stocks that we showcased here have proven track records for delivering solid performances.
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