Healthcare, one of the largest and most complex sectors, is composed of a broad range of companies that sell medical products and services. The healthcare sector includes companies that sell drugs, medical devices, and insurance, as well as hospitals and healthcare providers. Some of the largest healthcare companies in the world include UnitedHealth Group Inc. (UNH), Pfizer Inc. (PFE), and Abbvie Inc. (ABBV).
The healthcare sector has caught investors’ attention since some of these companies have received regulatory approval for drugs to treat COVID-19 and begun distributing vaccines, and others are rushing to develop and win approval for new COVID-19 drugs. There are also companies involved in various other ways with combating the pandemic, such as supplying products to test for and manage treatments of the virus.
Despite this surge in demand for COVID-19 treatments, healthcare stocks have underperformed the broader market. In this story, the sector is represented by the Health Care Select Sector SPDR ETF (XLV), an exchange-traded fund. XLV’s total return was 26.6% over the past 12 months, below the Russell 1000’s total return of 34.3%, as of Sept. 20, 2021. The statistics in the tables below are also as of Sept. 20, 2021.
Here are the top three healthcare stocks with the best value, fastest growth, and most momentum.
These are the healthcare stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.
|Best Value Healthcare Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Sage Therapeutics Inc. (SAGE)||45.22||2.7||3.6|
|Organon & Co. (OGN)||32.94||8.4||4.0|
|Bio-Rad Laboratories Inc. (BIO)||782.52||23.3||5.8|
- Sage Therapeutics Inc.: Sage Therapeutics creates treatments for central nervous system disorders, including schizophrenia and major depressive disorder. On Sept. 21, Sage announced the appointment of Chris Benecchi as Chief Commercial Officer. Benecchi will lead the company's global commercial efforts across all programs, new product planning, strategy, and competitive intelligence. Benecchi was previously vice president, Global Head of Commercial Excellence at Alexion Pharmaceuticals, a subsidiary of AstraZeneca PLC.
- Organon & Co.: Organon is a pharmaceutical company. It develops and produces medicines for reproductive health, dermatology, heart disease, allergies, and other areas.
- Quidel Corp.: Quidel is a developer and manufacturer of diagnostic healthcare products. The company provides diagnostic solutions for the detection and diagnosis of infectious, gastrointestinal, autoimmune, and other diseases. The company also makes products to test for COVID-19.
These are the top healthcare stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
|Fastest Growing Healthcare Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Regeneron Pharmaceuticals Inc. (REGN)||640.89||68.6||267.5||163.2|
|The Cooper Companies Inc. (COO)||429.90||21.2||1,000||32.0|
|Royalty Pharma PLC (RPRX)||36.83||15.7||1,100||8.6|
- Regeneron Pharmaceuticals Inc.: Regeneron Pharmaceuticals is a biopharmaceutical company that sells products for the treatment of eye diseases, allergic and inflammatory diseases, cancer, cardiovascular and metabolic diseases, and other serious diseases.
- The Cooper Companies Inc.: Through subsidiaries, The Cooper Companies develops, makes, and markets specialty healthcare products. The company provides contact lenses, diagnostic instruments, surgical instruments, and accessories. Cooper Companies announced on Sept. 2 that Q3 FY 2021 ended July 31, 2021. For that quarterly period, net income grew more than 11-fold as operating income climbed by 39.7% YOY. Results were driven in part by the strength of the company's CooperSurgical segment, which posted 60% YOY revenue gains.
- Royalty Pharma PLC: Royalty Pharma is a late-stage biopharmaceutical product investment company. The company collaborates with biotechnology companies of all sizes, research hospitals, academic institutions, research hospitals to develop treatments. Its profile of pharmaceutical investments includes commercial products and development-stage candidates. Royalty Pharma announced on Aug. 11 that consolidated net income rose about a third as operating income climbed by 82.2% YOY in Q2 2021, ended June 30, driven by newly acquired assets and the performance of its cystic fibrosis franchise, among other factors.
These are the healthcare stocks that had the highest total return over the last 12 months.
|Healthcare Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Moderna Inc. (MRNA)||423.33||170.9||505.9|
|Align Technology Inc. (ALGN)||709.64||56.2||121.1|
|Bio-Techne Corp. (TECH)||528.82||20.7||117.5|
|Health Care Select Sector SPDR ETF (XLV)||N/A||N/A||26.6|
- Moderna Inc.: Moderna is a clinical-stage biotechnology company focused on the discovery and development of messenger ribonucleic acid (mRNA) therapeutics and vaccines. It develops mRNA medicines for infectious, immuno-oncology, and cardiovascular diseases. Moderna’s COVID-19 vaccine continues to be in high demand globally. On Sept. 16, Moderna announced that the Canadian government's health department, Health Canada, had approved spikevax, the company's COVID-19 vaccine. The approval is for active immunization to prevent COVID-19 in individuals 12 years and older. It is the first full approval for the drug.
- Align Technology Inc.: Align Technology makes and sells the invasalign system, a method for treating misaligned teeth. The company markets its products around the world.
- Bio-Techne Corp.: Bio-Techne develops, manufactures, and markets a variety of biotechnology products and clinical controls. The company offers proteins, growth factors, immunoassays, cytokines, and small molecules, among other related products. In mid-September Bio-Techne launched the ExCellerate iPSC Expansion Medium, a new medium for the expansion and maintenance of induced pluripotent stem cells (iPSCs). The medium does not utilize components derived from humans or animals. ExCellerate can be used to generate large quantities of homogeneous, undifferentiated cells for medical research.
The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.
YCharts. “Financial Data.” Accessed Sept. 21, 2021.
Sage Therapeutics Inc. "Sage Therapeutics Appoints Chris Benecchi as Chief Commercial Officer." Accessed Sept. 21, 2021.
The Cooper Companies Inc. "CooperCompanies Announces Third Quarter 2021 Results." Accessed Sept. 21, 2021.
Royalty Pharma PLC. "Royalty Pharma Reports Second Quarter 2021 Results." Accessed Sept. 21, 2021.
Moderna Inc. "Moderna Announces Health Canada Approves its COVID-19 Vaccine." Accessed Sept. 21, 2021.
Bio-Techne Corp. "Bio-Techne Launches ExCellerate™ iPSC Expansion Medium." Accessed Sept. 21, 2021.