In the ever-evolving landscape of investing, the spotlight is on the top healthcare stocks to buy on the dip. The healthcare sector is highly known for its robust resilience and incredible growth potential. Once again, it’s been thrust into the limelight due to global health challenges. With inflation rearing its head and consumers prioritizing essentials, healthcare indisputably emerges as a non-negotiable expenditure.
This context has led to a surge in investors scouting the market for prime healthcare stocks to buy on the dip. While many behemoths command top-dollar valuations, a treasure trove of undervalued gems exists in this space. These overlooked stocks not only offer affordability but also the promise of impressive returns.
With that said, let’s look at the best healthcare stocks ripe for acquisition.
Humana (HUM)
Humana (NYSE:HUM) remains a titan in the U.S. health insurance landscape. It is impressively weathering economic storms that brought some of its competition to their knees.
Rather intriguingly, its recent market dip, with the stock shedding more than 8.50% year to date (YTD), seems driven more by investor sentiment than by a tangible setback. A hint of unease looms around the Medicare Advantage cost trends and a path of caution when dealing with health insurance stocks in an election year.
Nevertheless, with 20 million members and a global health insurance market predicted to balloon by 42% to a staggering $2.7 trillion by 2030, Humana is set to outstrip its industry peers. Its recent second-quarter figures solidify this optimism, recording a sturdy $26.7 billion in revenue, up 13% year over year (YOY). Even with a conservative outlook on the year’s end, their Medicare Advantage segment is to offer a solid 15% sales growth, clocking in at $25.9 billion. Clearly, the firm isn’t just surviving. It’s thriving.
TransMedics Group (TMDX)
TransMedics Group (NASDAQ:TMDX) is at the forefront of innovation in the healthcare sphere. They are revolutionizing organ preservation with its trailblazing normothermic machine perfusion technology.
Unlike the previous standard of rudimentary static cold storage, its FDA-approved Organ Care System (OCS) effectively mirrors the body’s physiologic conditions. With OCS in play, this narrative has shifted, with the system prolonging the organ’s viability outside its native environment and enabling vital diagnostic tests.
This breakthrough didn’t go unnoticed. Some of the most reputable transplant centers rapidly embraced OCS, nudging the former cold storage systems to the sidelines.
Its success is reflected in its most recent quarterly results, showing a whopping $52.5 million in sales, a staggering 156% YOY surge. It’s worth noting that this meteoric rise followed just three years after the inaugural OCS Heart system’s approval a couple of years ago. Moreover, TransMedics is leveraging tech and smart initiatives such as the National OCS Program (NOP). With 95% of its second-quarter U.S. revenues from its participants, strong growth ahead is signaled.
Johnson & Johnson (JNJ)
Navigating tumultuous waters, Johnson & Johnson (NYSE:JNJ) stands at a pivotal juncture. True, there’s unease around the looming $8.9 billion talc lawsuit settlement. The silver lining is that this figure has transitioned from an unknown to a definite.
Moving on to the positives, the healthcare behemoth posted impressive Q2 results, outshining earnings expectations and elevating its annual guidance. Notably, the MedTech arm witnessed an uptick during the quarter.
Echoing resilience, JNJ highlighted a resurgence in non-urgent surgeries. This was especially strong among older demographics who hit pause on such procedures during the pandemic. The revision in the company’s annual revenue forecast, now falling in the $98.8 billion and $99.8 billion range, underscores its robust trajectory.
Moreover, the spin-off of its consumer health segment into the standalone entity, Kenvue, was applauded by market mavens. This represents a strategic positioning to sharpen its focus on its pharmaceutical endeavors. Beyond this, Johnson & Johnson’s legacy as a dividend king is commendable. After all, it boasts an unbroken 62-year streak of dividend hikes.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines
