Top Healthcare Stocks for September 2022

AZTA, VRTX, and MCK lead the pack for value, growth, and momentum, respectively

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., Pfizer Inc., and AbbVie Inc.

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. Some companies are rushing to develop and win approval for their own COVID-19 drugs, while others are supplying products to test for and manage treatments for the virus.

Healthcare stocks, as represented by the Health Care Select Sector SPDR ETF (XLV), an exchange-traded fund (ETF), have outperformed the broader market. Healthcare stocks posted a total return of 0.4% over the past year compared to the Russell 1000’s total return of -7.6%. The market performance figures and the statistics in the tables below are as of August 9, 2022.

Here are the top three healthcare stocks with the best value, fastest growth, and most momentum.

Best Value Healthcare Stocks

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 ($) Market Capitalization (Market Cap) ($B) 12-Month Trailing P/E Ratio
Azenta Inc. (AZTA) 63.85 4.8 2.2
QuidelOrtho Corp. (QDEL) 86.47 3.6 3.7
Moderna Inc. (MRNA) 171.14 67.0 5.2

Source: YCharts

  • Azenta Inc.: Azenta is a life sciences company providing sample management and genomic services including drug development, sample and material storage, and clinical trial management. Its customers are pharmaceutical, biotechnology, and life sciences research companies and institutions.
  • QuidelOrtho Corp.: QuidelOrtho (formerly Quidel Corp.) manufactures and markets rapid diagnostic tests for use in physicians' offices, hospitals, laboratories, and over-the-counter settings, among others. On May 27, Quidel announced that it had completed its acquisition of Ortho Clinical Diagnostics Holdings PLC for an equity value of $6 billion. Due to the merger, Quidel changed its name to QuidelOrtho. It continues to trade under Quidel's original ticker, QDEL.
  • Moderna Inc.: Moderna is a biotech company that focuses on RNA therapeutics, primarily mRNA vaccines. It offers a clinical portfolio of vaccines and therapeutics including one of the earliest vaccines against the COVID-19 pandemic. On July 29, Moderna announced that the U.S. government had secured 66 million doses of its COVID-19 booster candidate, mRNA-1273.222, for an award of up to $1.74 billion. The agreement provides the U.S. government the option of purchasing up to 234 million additional doses as well.

Fastest-Growing Healthcare Stocks

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 a 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 (%)
Vertex Pharmaceuticals Inc. (VRTX) 298.83 76.6 1,100 22.5
Bio-Techne Corp. (TECH) 361.12 14.2 308.1 11.3
Pfizer Inc. (PFE) 49.78 279.3 76.5 46.2

Source: YCharts; Pfizer Inc.

  • Vertex Pharmaceuticals Inc.: Vertex Pharmaceuticals is a biotechnology company that develops medicines primarily to treat the underlying cause of cystic fibrosis (CF). It has related programs to enhance the treatment of CF. Vertex reported Q2 2022 earnings results on August 4. Net income grew about 12-fold on strong revenue gains year-over-year (YOY). Revenue growth for the company's TRIKAFTA/KAFTRIO treatment for CF was particularly strong.
  • Bio-Techne Corp.: Bio-Techne develops, manufactures, and sells reagents, instruments, and other products for life sciences companies. Its products are used for research, bioprocessing, and diagnostics. On August 4, Bio-Techne released earnings results for Q4 FY 2022, ended June 30. Net earnings attributable to the company more than quadrupled YOY on comparably modest revenue growth. The company said that strong demand across its portfolio of proteomic reagents and analytical tools contributed to growth.
  • Pfizer Inc.: Pfizer is a multinational pharmaceutical and biotechnology company. It researches, develops, and manufactures biopharmaceutical products across a range of different areas, including oncology, cardiovascular disease, inflammatory diseases, immunology, rare diseases, and vaccines. On August 8, Pfizer announced it would acquire biopharmaceutical company GBT for a total enterprise value of roughly $5.4 billion. GBT focuses on discovering and developing treatments for sickle cell disease and other related diseases.

Healthcare Stocks With the Most Momentum

These are the healthcare stocks that had the highest total return over the past 12 months.

Healthcare Stocks With the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
McKesson Corp. (MCK) 354.77 51.0 81.6
Vertex Pharmaceuticals Inc. (VRTX) 298.83 76.6 49.1
Centene Corp. (CNC) 94.77 55.0 43.2
Russell 1000 N/A N/A -7.6
Health Care Select Sector SPDR ETF (XLV) N/A N/A 0.4

Source: YCharts

  • McKesson Corp.: McKesson is a global healthcare company that provides products, distribution, and services to a broad range of customers including retail pharmacies, specialty practices, surgery centers, physicians' offices, healthcare providers, and nursing homes. On July 25, the company announced a quarterly dividend of $0.54 per share of common stock. The dividend is payable on October 3 to shareholders as of September 1, 2022.
  • Vertex Pharmaceuticals Inc.: See company description above.
  • Centene Corp.: Centene is a managed healthcare company, focusing on administering government-sponsored programs. It also provides correctional healthcare services and education and outreach programs.

Key Trends in the Healthcare Sector

The COVID-19 pandemic and technological advances have accelerated several key trends across the healthcare sector that provide potential opportunities for investors. Two of these include telehealth and healthcare wearables.

Telehealth: Telehealth connects patients with health professionals using technology such as video calls and health apps. These services allow people in regional areas, or those who can’t easily travel, to access medical advice in their homes or workplace.

A survey conducted by the Bipartisan Policy Center showed that 63% of respondents had used telehealth as a preventative service, prescription refill, or routine visit for a chronic illness. Moreover, eight in 10 surveyed said their primary health issue was resolved and that they would likely use telehealth in the future. Investors can gain exposure to telehealth through stocks, including Teladoc Health, Inc. (TDOC), Doximity, Inc. (DOCS), and American Well Corporation (AMWL).

Healthcare Wearables: Wearable electronic devices allow consumers and or patients to wear technology that collects their personal health and fitness data. Healthcare wearables can send a user's health information in real time to a doctor or other health professional for regular monitoring. 

Some of the more popular healthcare wearable devices include smart health watches, ECG monitors, blood pressure monitors, and biosensors. A survey conducted by Insider Intelligence found U.S. consumers' use of healthcare wearables increased from 9% to 33% in the past four years and will continue to grow as new health-tracking technologies emerge. Key stocks involved in healthcare wearables include Garmin Ltd. (GRMN), Wearable Health Solutions, Inc. (WHSI), and of course, Apple Inc. (AAPL).

Advantages of Healthcare Stocks

In the wake of the pandemic, the healthcare sector will likely see further public and private investment, helping to drive innovation and profits. Moreover, an aging baby boomer population continues to underpin the space, creating additional demand for medical products and services. According to the Centers for Medicare and Medicaid Services, U.S. national healthcare expenditure is expected to reach $6.2 trillion by 2028, highlighting the sector's size.

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. Though 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.

Article Sources
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  1. YCharts. “Financial Data.”

  2. QuidelOrtho Corp. "QuidelOrtho Formed by the Completion of Transaction Combining Quidel and Ortho Clinical Diagnostics."

  3. Moderna Inc. "Moderna Announces New Supply Contract With The U.S. Government For An Initial 66 Million Doses Of A Moderna Bivalent Covid-19 Booster Vaccine With Options For U.S. Government To Purchase Up To An Additional 234 Million Doses."

  4. Vertex Pharmaceuticals Inc. "Vertex Reports Second Quarter 2022 Financial Results."

  5. Bio-Techne Corp. "BIO-TECHNE RELEASES FOURTH QUARTER FISCAL 2022 RESULTS."

  6. Pfizer Inc. "Pfizer to Acquire Global Blood Therapeutics for $5.4 Billion to Enhance Presence in Rare Hematology."

  7. McKesson Corp. "McKesson Raises Quarterly Dividend by 15% to $0.54 Per Share."

  8. Insider Intelligence. "US Healthcare Industry in 2022: Analysis of the Health Sector, Healthcare Trends, and Future of Digital Health."

  9. Bipartisan Policy Center. "New Survey: Virtual Care Could Keep Low-Acuity Cases Out of Emergency Department."

  10. Insider Intelligence. "The Top Medical Monitoring and Healthcare Wearable Device Trends of 2022."

  11. Centers for Medicare and Medicaid Services. "NHE Fact Sheet."

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