Stocks to buy

3 Healthcare Stocks To Make You The Millionaire Next Door: October Edition

During the pandemic era, several healthcare stocks skyrocketed. The focus was, however, on biopharma companies with an early-mover advantage related to the vaccine against Covid-19. Sentiments have changed drastically in a post-pandemic era with 2023 being a subdued year for healthcare stocks.

However, there is no doubt about the point that global healthcare spending will continue to remain in an uptrend. Be it demographics or the threat of new disease outbreaks, healthcare companies will have a big addressable market.

To put things into perspective, healthcare spending is likely to increase at a CAGR of 5.,1% through 2030. By the end of the decade, the total healthcare spending will reach $6.8 trillion.

Therefore, with several healthcare stocks trading at attractive valuations, it’s a good time to consider some names for the next five years.

Let’s discuss the reasons to be bullish on these three healthcare stocks to buy.

Intuitive Surgical (ISRG)

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Intuitive Surgical (NASDAQ:ISRG) stock is among the millionaire maker healthcare stocks to buy. With higher focus on minimally invasive care in the U.S. and globally, Intuitive Surgical is well positioned to benefit. It’s worth noting that year-to-date (YTD), ISRG stock has remained sideways. I see this as a good accumulation opportunity.

An important point to note is that Intuitive continues to report positive business metrics even as the stock remains sideways. For Q2 2023, da Vinci procedures grew approximately 22% on a year-on-year (YOY) basis. Further, the da Vinci surgical system installed base increased to 8,042 systems as of Q2 2023, which was higher by 13% on a YOY basis.

Another growth trigger is the point that Intuitive has a globally addressable market. There is ample scope for penetration in emerging markets. With $7.3 billion in cash and equivalents, Intuitive has high financial flexibility for investment in R&D and expanding global presence.

AstraZeneca (AZN)

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AstraZeneca (NASDAQ:AZN) stock has been in a strong consolidation mode as of late. I believe that a forward price-earnings ratio of 18.5 is attractive and AZN stock is poised for a strong breakout rally. Even from a long-term perspective, the company is a potential value creator.

The first reason to be bullish on AstraZeneca is a strong pipeline. Currently, 172 projects are in the pipeline with 14 new molecular entities in the late-stage.

I must also add that the company believes that there are 10 potential blockbuster opportunities from 30 potential phase three trials planned in 2023. Clearly, the growth outlook is robust, coupled with the visibility for cash flow upside. The growth story is supported by the fact that AstraZeneca has strong presence in emerging markets.

An important point to note is that AstraZeneca is leveraging on the power of AI for drug development, manufacturing, and supply chain. This is likely to translate into EBITDA margin expansion in the coming years.

Compass Therapeutics (CMPX)

Photo of a rack of multicolored test tubes with a hand in a medical glove reaching to grab one tube

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Among penny healthcare stocks, Compass Therapeutics (NASDAQ:CMPX) is worth considering. After a massive correction of 61% YTD, CMPX stock looks deeply undervalued and is poised for a strong reversal rally.

As an overview, Compass is a clinical-stage oncology-focused company that’s developing antibody-based therapeutics. Of course, being in the clinical-stage implies high risk. However, multibagger returns are likely if the company can enter the commercialization stage.

The positive here is that Compass already has two molecular entities that are in the second phase of trials. The pipeline is attractive with a few other molecular entities in the pre-clinical and stage one phase of trials. The pipeline ensures that Compass will have an interesting 24 months. If the progress remains smooth, CMPX stock can skyrocket.

Another important consideration is the management. The leadership team consists of individuals from Pfizer (NYSE:PFE), Bristol-Myers Squibb (NYSE:BMY), among others. This adds to the credibility and even with high risk, some exposure can be considered for multi-fold returns.

On the date of publication, Faisal Humayun did not hold (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 Publishing Guidelines.

Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.