Health care, one of the largest and most complex sectors, is comprised of a broad range of companies that sell medical products and services. The health care sector includes companies that sell drugs, medical devices, and insurance, as well as hospitals and health care providers. Some of the largest health care companies in the world include UnitedHealth Group Inc. (UNH), Pfizer Inc. (PFE), and Abbvie Inc. (ABBV). Several health care companies have received U.S. Emergency Use Authorization (EUA) to develop either tests or treatments for COVID-19, helping to fuel optimism about their shares.
Health care stocks, as represented by the Health Care Select Sector SPDR ETF (XLV), have slightly outperformed the broader market, providing investors with a total return of 19.9% compared to the S&P 500's total return of 19.1% over the past 12 months. These market performance numbers and the statistics in the tables below are as of August 21.
Here are the top 3 health care stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Health Care Stocks
These are the health care 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 Health Care Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Bio-Rad Laboratories Inc. (BIO)||515.58||15.3||8.0|
|Biogen Inc. (BIIB)||277.52||43.9||8.1|
|CVS Health Corp. (CVS)||63.72||83.4||10.1|
- 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. The company announced in early May that it had received EUA from the U.S. Food and Drug Administration for its SARS-CoV-2 Droplet Digital PCR test kit. The test kit is designed to test for COVID-19 infections at an early stage.
- Biogen Inc.: Biogen focuses on the discovery, development, and commercialization of pharmaceutical treatments, with a strong focus on the fields of neurology, immunology, and oncology. The company announced in late July the appointment of Michael McDonnell to the roles of Executive Vice President and Chief Financial Officer (CFO).
- CVS Health Corp.: CVS Health is an integrated pharmacy health care provider. The company provides services including pharmacy benefit management, mail order delivery, and retail sales. It also operates disease management programs and retail clinics.
Fastest Growing Health Care Stocks
These are the health care stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Health Care Stocks|
|Market Cap ($B)||EPS Growth (%)|
|Perrigo Co. PLC (PRGO)||53.09||7.2||528.6|
|Regeneron Pharmaceuticals Inc. (REGN)||616.89||65.6||353.0|
|Cardinal Health Inc. (CAH)||50.16||14.7||243.1|
- Perrigo Co. PLC: Perrigo is an Ireland-based health care company offering over-the-counter consumer goods and specialty pharmaceutical products. Its products include pharmaceuticals, infant formulas, nutritional products, active pharmaceutical ingredients, and pharmaceutical and medical diagnostic products. The company reported net income growth of 573.3% on net sales growth of 6.1% for Q2 2020, which ended June 27, 2020.
- Regeneron Pharmaceuticals Inc.: Regeneron Pharmaceuticals is a biopharmaceutical firm that discovers, develops, and markets treatments for a variety of serious medical conditions. Regeneron announced in early July that, under the U.S. government's Operation Warp Speed program, it had been awarded a $450 million contract by the Biomedical Advanced Research and Development Authority (BARDA) and the Department of Defense. Under the contract, Regeneron will manufacture and supply REGN-COV2, an anti-viral antibody cocktail that could be used for the treatment of COVID-19 and potentially its prevention.
- Cardinal Health Inc.: Cardinal Health is a provider of health care services and products. Its services include pharmaceutical distribution, health care product manufacturing, distribution and consulting services, drug delivery systems development, pharmaceutical packaging, retail pharmacy franchising, and more.
Health Care Stocks with the Most Momentum
These are the health care stocks that had the highest total return over the last 12 months.
|Health Care Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|DexCom Inc. (DXCM)||431.88||41.4||156.6|
|Regeneron Pharmaceuticals Inc. (REGN)||616.89||65.6||108.4|
|West Pharmaceutical Services Inc. (WST)||275.47||20.3||90.5|
|Health Care Select Sector SPDR ETF (XLV)||N/A||N/A||19.9|
- DexCom Inc.: DexCom is a medical device company that focuses on the design and development of continuous glucose monitoring systems for people with diabetes. The company reported revenue growth of 34.3% for Q2 2020, which ended June 30, 2020. It reported net income for the quarter, a significant change from the net loss posted in the same quarter a year ago.
- Regeneron Pharmaceuticals Inc.: See above for company description.
- West Pharmaceutical Services Inc.: West Pharmaceutical Services designs and manufactures packaging components, drug delivery systems, contract laboratory services and related products designed to bring new drug therapies to the public.
U.S. Food & Drug Administration. "Emergency Use Authorization." Accessed Aug. 23, 2020.
YCharts. "Financial Data." Accessed Aug. 21, 2020.
Bio-Rad Laboratories Inc. "Bio-Rad Receives FDA Emergency Use Authorization for Droplet Digital PCR SARS-CoV-2 Test Kit." Accessed Aug. 23, 2020.
Biogen Inc. "BIOGEN NAMES MICHAEL MCDONNELL AS EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER." Accessed Aug. 23, 2020.
Perrigo Co. PLC. "Perrigo Company plc Reports Second Quarter 2020 Financial Results." Accessed Aug. 23, 2020.
Regeneron Pharmaceuticals Inc. "REGENERON ANNOUNCES MANUFACTURING AND SUPPLY AGREEMENT FOR BARDA AND U.S. DEPARTMENT OF DEFENSE FOR REGN-COV2 ANTI-VIRAL ANTIBODY COCKTAIL." Accessed Aug. 23, 2020.
DexCom Inc. "Dexcom Reports Second Quarter 2020 Financial Results." Accessed Aug. 23, 2020.