With healthcare spending projected to grow 5.4% annually through 2031, healthcare stocks remain highly compelling investments in the current market. As one of the few sectors with near-guaranteed growth trajectories thanks to constant consumer demand, healthcare stocks to buy right now present investors with stability and upside.
Even in challenging economic environments, healthcare stocks tend to outperform as people continue prioritizing their health and medical needs. Additionally, current demographic trends point to expanding demand for healthcare services and products. With 10,000 Baby Boomers turning 65 every day, companies catering to the senior population should harness natural tailwinds. And coverage expansions mean more patients are able to access care.
Backed by these powerful secular growth drivers, many healthcare stocks trade at attractive valuations despite the sector’s resilience. So, as the market continues its measured climb back from a volatile 2022, investors have momentum on their side when building positions in high-quality healthcare names. Stocks delivering essential medical products and services look especially compelling if seeking a degree of protection from macroeconomic uncertainty.
UnitedHealth (UNH)
UnitedHealth Group (NYSE:UNH) is one of the best healthcare stocks to buy for long-term investors. As the largest health insurer on a global scale, UnitedHealth Group provides health benefits and services to more than 152 million people. The company has delivered steady growth — even through challenges like the recent Change Healthcare cyberattack.
In Q1 2024, UnitedHealth Group generated revenues of $99.8 billion, representing nearly $8 billion of growth versus the prior year. The cyberattack and sale of its Brazil operations had an effect on earnings. However, the company still expects full-year 2024 adjusted earnings per share of $27.50-$28.00. That translates to 9-11% growth over 2023, which is in line with UnitedHealth’s long-term target of 13-16% annual earnings growth.
Additionally, the core of UnitedHealth’s business remains strong. Its Optum unit, driving about half of total profits, grew revenue by 13% this quarter. And the UnitedHealthcare insurance arm posted 7% revenue growth as commercial membership rose. Therefore, as medical utilization trends back toward normal levels post-pandemic, UnitedHealth looks well-positioned. Even with the cyberattack headwinds, UnitedHealth Group expects to deliver steady growth this year and beyond. Its balance of health insurance and services positions it well in an evolving healthcare environment. For investors on the hunt for a stable, established player in the healthcare space, UnitedHealth stands out as one of the best healthcare stocks to buy for the long run.
HCA Healthcare (HCA)
HCA Healthcare (NYSE:HCA) is one of the most attractive healthcare stocks to buy for investors who are keeping an eye out for stability and growth in the health services industry. The organization is the largest private hospital operator in the United States. It owns and operates 186 hospitals and around 2,400 ambulatory sites of care across 20 states and the UK. This extensive network serves as the foundation for steady, reliable growth.
In Q1 2024, HCA delivered strong financial and operating results on the back of robust patient volume growth. For example, revenues rose 11% YoY to $17.3 billion, and adjusted EBITDA grew 8% to $3.35 billion. Furthermore, net income exceeded $1.5 billion. The company also reported a 6.2% increase in same-hospital admissions and 5.2% growth in same-facility equivalent admissions. This consistent volume growth results in dependable revenue and earnings growth over time.
HCA also has a great track record of returning significant cash to shareholders via dividends and buybacks. The company recently authorized an additional $6 billion share repurchase program and declared a quarterly dividend of $0.66 per share. As one of the most profitable hospital operators, HCA generates more than enough free cash flow to fund these shareholder returns.
With its leading market share and scope, HCA is in the perfect position to take advantage of aging demographics. It can also benefit from the resumed growth in procedure volumes as healthcare utilization normalizes post-pandemic. For investors hunting for a reliable player in health services, HCA is one of the best healthcare stocks to buy.
Intuitive Surgical (ISRG)
Intuitive Surgical (NASDAQ:ISRG) is among the top healthcare stocks to buy thanks to its innovations. As a pioneer and leader in robotic-assisted surgery, Intuitive has tremendous growth potential as its da Vinci surgical systems continue gaining adoption globally.
In the first quarter of 2024, Intuitive generated revenues of $1.89 billion, representing 11% year-over-year growth. Intuitive placed 313 da Vinci systems during the quarter, reflecting 14% growth in its installed base versus last year. The company performed over 2.2 million procedures in 2023 alone, with total da Vinci procedures now exceeding 14 million.
Intuitive expects strong continued momentum, forecasting 16% procedure growth in 2024 over the prior year. As of Q1, the company had an installed base exceeding 9,100 da Vinci systems worldwide. Plus, with recurring revenue making up 83% of total sales in 2023, Intuitive enjoys stable cash flows to support investments in next-generation platforms like the newly FDA-cleared da Vinci 5 system.
Even with significant R&D investments, Intuitive delivered $1.50 in pro forma EPS last quarter and enjoys generous 67.6% pro forma gross margins. So, as hospitals all over the world jump on the advanced robotic surgery bandwagon to improve patient outcomes, Intuitive stands ready to ride this secular growth trend for years to come. For investors on the lookout for a high-growth medtech leader, Intuitive Surgical remains one of the most compelling healthcare stocks to buy today.
On the date of publication, Andrea van Schalkwyk did not hold (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
