Healthcare, one of the largest and most complex sectors, is comprised 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, 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). XLV's total return was 25.0% over the past 12 months, below the Russell 1000's total return of 38.1%, as of July 16, 2021. The statistics in the tables below are also as of July 16.
Here are the top 3 healthcare stocks with the best value, the fastest growth, and the 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 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)||47.74||2.8||4.0|
|Bio-Rad Laboratories Inc. (BIO)||674.78||20.1||5.0|
|Quidel Corp. (QDEL)||125.12||5.3||5.8|
- Sage Therapeutics Inc.: Sage Therapeutics creates treatments for central nervous system disorders including schizophrenia and major depressive disorder.
- Bio-Rad Laboratories Inc.: Bio-Rad is a maker of life science research products and analytical instrumentation. These tools are used to separate and analyze complex chemical and biological materials. In late June, Bio-Rad announced a partnership with South Korea-based Seegene, Inc., a molecular diagnostics company. Under the partnership, Seegene will provide diagnostic tests for use with Bio-Rad products, which help detect infectious diseases. The product will be used in U.S. markets, pending clinical development and clearance from the Food and Drug Administration.
- 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. Quidel announced on July 19 that the state of Delaware had selected its service provider, Quidel Services LLC, to implement a full-service COVID-19 testing program in K-12 schools this fall.
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 year over year (YOY) percentage revenue growth and their 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 or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest Growing Healthcare Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|PerkinElmer Inc. (PKI)||154.10||17.3||1,020||100.4|
|PPD Inc. (PPD)||46.00||16.2||2,000||28.5|
|Boston Scientific Corp. (BSX)||42.10||59.8||2,200||8.2|
- PerkinElmer Inc.: PerkinElmer is a provider of technology, services, and solutions to the diagnostics, life sciences, and other markets. Its products include equipment used for genetic screening and drug discovery, optoelectronics, analytical instruments, and more. The company announced in late June that it would acquire Germany-based SIRION Biotech GmbH, a provider of viral vector technologies used for cell and gene therapies. The acquisition is expected to close during Q3 2021. Terms of the deal were not disclosed.
- PPD Inc.: PPD operates as a global contract research organization. It engages in drug discovery, clinical development, lifecycle management, and laboratory services. It provides services to pharmaceutical, biotechnology, medical device, and government organizations.
- Boston Scientific Corp.: Boston Scientific specializes in minimally invasive medical devices and markets a variety of products used in endoscopy, cardiology, urology, and more.
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)||286.43||115.0||250.1|
|NovoCure Ltd. (NVCR)||182.57||18.9||196.5|
|Natera Inc. (NTRA)||113.12||9.9||140.8|
|Health Care Select Sector SPDR ETF (XLV)||N/A||N/A||25.0|
- Moderna Inc.: Moderna is a clinical-stage biotechnology company focused on the discovery and development of messenger RNA 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. In late June, the company announced that the government of India had issued emergency use authorization for the import and use of its COVID-19 vaccine. On July 12, Moderna announced that it had reached an agreement to provide Argentina with 20 million doses of the vaccine, beginning in Q1 2022.
- NovoCure Ltd.: NovoCure is a commercial-stage oncology company. It researches and develops technologies for the treatment of cancer. The company's headquarters are located in Jersey, a dependency of the British Crown.
- Natera Inc.: Natera is a diagnostics company. It provides preconception and prenatal genetic testing, single gene testing, and similar services. On July 19, the company reported preliminary results for Q2 2021, including anticipated YOY revenue growth of roughly 60%. This is the largest YOY revenue growth rate in Natera's history as a publicly traded company. Natera also anticipates record volume growth.
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YCharts. "Financial Data." Accessed July 19, 2021.
Bio-Rad Laboratories Inc. "Bio-Rad Announces Partnership with Seegene for Molecular Diagnostic Testing Products." Accessed July 19, 2021.
Quidel Corp. "State of Delaware Selects Quidel for COVID-19 Testing Program at Schools." Accessed July 19, 2021.
PerkinElmer Inc. "PerkinElmer Agrees to Acquire Viral Vector Gene Delivery Leader SIRION Biotech." Accessed July 19, 2021.
Moderna Inc. "Moderna Announces Emergency Use Authorization for its COVID-19 Vaccine Granted by Government of India." Accessed July 19, 2021.
Moderna Inc. "Moderna Announces Supply Agreement with Argentina for 20 Million Doses of its COVID-19 Vaccine." Accessed July 19, 2021.
Natera Inc. "Natera Reports Preliminary Second Quarter 2021 Results." Accessed July 19, 2021.