In this article, we discuss the 10 best dental stocks to buy now according to hedge funds.
Dental health is one of the key indicators for overall health and well being. However, it is evident that the industry has been one of the most overlooked in the healthcare sector today. According to the International Agency for Research on Cancer, cancers of the lip and oral cavity are among the top 15 most common cancers worldwide, with nearly 180,000 deaths per year. The Global Burden of Disease Study 2017 estimated that oral diseases affect 3.5 billion people worldwide.
The numbers are not surprising. In the first place, most are scared of going to the dentist. In an article published by MoneyWeek, according to a survey, up to three-quarters of the population experience anxiety before they go to the dentist’s chair. Despite the fear, dental care is something we just can not refuse. In a study by Statista, in 2019, the global oral care market was worth about $44.5 billion. According to a report by NASDAQ, Over the past six years, the industry grew at a compound annual growth rate (CAGR) of 1.4 percent.
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The COVID-19 pandemic has left its mark on the entire US healthcare system, including the dental industry. Many dentists started contemplating selling their clinics and suspending their practices. According to the American Dental Association, in 2020, American dental spending declined 38 percent. In a poll taken in August, 51.3% of their respondents were open but had lower patient volume than usual. However, the US Bureau of labor statistics reported that the demand for dental services will increase as the population ages and as research continues to link oral health to overall health. This will result in the overall employment of dentists projection growth of 3 percent from 2019 to 2029, about as fast as the average for all occupations.
The Biden Administration aims to expand upon the Affordable Care Act (ACA), to improve access to health care for those without insurance. In 2016, it was first introduced by President Obama, the policy had seen the number of Americans lacking health insurance fall from 44 million to 27 million.
The American Dental Association (ADA) plans to work with the Biden Administration to address oral health care issues of the country. Mike Graham, the ADA’s senior vice president of government and public affairs mentioned,
“The ADA is the voice of thousands of dentists who care deeply about their patients and their profession,” Graham told DTI. “Dentists offer bipartisan support for elected officials and candidates who share the same goal: to promote the oral health of Americans. We congratulate all who were voted into office this month and look forward to working with the incoming elected officials, in Congress and the White House, to help dentists, patients and the profession make a difference in Washington, D.C., and improve the oral health of our country,”
Our in-house research reveals that by using the hedge fund sentiment data, we can identify a small group of stocks that can outperform the S&P 500 index on average by double digits annually. For instance, the portfolio for stock picks for our monthly newsletter has beaten the market by over 78 percentage points since March 2017 (see details here). Some of the portfolio choices for our monthly newsletter were also publicly shared by us. In October, we posted this real estate stock idea and since then it’s been up more than 50 percent.
Based on our hedge fund sentiment data, we present to you, the 10 best dental stocks to buy now among 800+ hedge funds tracked by Insider Monkey:
10. Procter & Gamble (NYSE:PG)
No of HFs: 75
Total Value of HF Holdings: $10.09 Billion
We rank the diversified consumer goods company, PG as the 10th best dental stock to buy now. Although it sells toothpaste, toothbrushes, oral care vitamins, and mouth washes, the stock is not a pure-play dental stock. This is why we ranked PG as the 10th stock to buy now. Otherwise, we wouldn’t have included it on our list. PG was also mentioned as one of the 10 Best Dow Stocks to Buy Now and as one of the 15 Best Blue Chip Stocks to Buy Now. P&G is considered to be one of the oldest running companies in the world. It is a global consumer goods corporation that continues to innovate and develop new products despite being over 180-years-old.
At present, P&G is branded to be the world’s largest consumer goods company. They have recorded 5 billion consumers in 180 countries around the globe. The company is known for its billion-dollar 65 individual brands that are put into 10 product categories such as fabric care, home care, baby care, feminine care, family care, grooming, oral care, personal health care, hair care, plus the skin & personal care. In Distillate Capital’s recent Q2 2020 investor letter they mentioned a few of their comments in the stock.
“P&G is an example of a stock where the free cash yield has actually improved over the course of the year on both next-twelve-month estimates and our normalized methodology.”
9. Aesthetic Medical International Holdings Group (NASDAQ:AIH)
No of HFs: 1
Total Value of HF Holdings: $181 Thousand
AAIH ranks 9th in our list of the best dental stocks to buy now. IH provides aesthetics services, including surgery and non-surgical treatments. The company recently announced the termination of the agreement to acquire a 51% equity interest in Guangdong Hanfei Investment Management Co., Limited. The decision was greatly affected by the impact of the COVID-19 pandemic. Dr. Zhou Pengwu, the Chairman and CEO of the Company said,
“We sincerely regret that the current market and economic condition caused by the COVID-19 pandemic does not set the right stage for the acquisition of Hanfei, and we have determined that it is in the best interest of our shareholders to call off the transaction at this time. Our overall strategy, however, remains steadfast, and we will actively implement our acquisition strategy. Going forward, we will continue to investigate and pursue attractive opportunities in strategic investment and acquisition to address the growing demand for aesthetic medical services nationwide and generate greater shareholder value.”
8. Biolase, Inc. (NASDAQ:BIOL)
No of HFs: 4
Total Value of HF Holdings: $159 Thousand
BIOL ranks 8th in our list of the best dental stocks to buy now. The top hedge fund holder of this stock is Hal Mintz’s Sabby Capital which had $92 thousand invested in the stock at the end of September. BIOL is the world’s leading innovator in dental lasers. They recently announced an agreement with DSO Dental Care Alliance to expand laser adoption in dental offices across the United States. Todd Norbe, BIOLASE President and CEO is confident that they will properly service DCA,
“Our industry-leading dental lasers allow us to properly service a customer like DCA, and by reducing aerosols in dental offices we believe we can improve the safety of its office staff and patients. The demand for EpicX and Epic Hygiene lasers is rising, and this year alone we have sold over 100 systems to DCA. We are excited to be partnering with DCA as they continue to roll out our Epic lasers across their U.S. offices.”
7. 3D Systems Corporation (NYSE:DDD)
No of HFs: 15
Total Value of HF Holdings: $33 Million
DDD ranks 7th in our list of the best dental stocks to buy now. The top hedge fund holder of this stock is D.E Shaw’s DE Shaw which had $11 million invested in the stock at the end of September. An insider purchased 17,000 shares at around $5 in September 2020. The stock is down 620% since then. The company provides 3D printing and printers for plastics and metals. During the third quarter of 2020, the company reported a Product business generated revenue of $77.2 million. Here is what we recently said about DDD:
“The company has been in the 3D business for more than 3 decades. DDD stock has seen many ups and downs over the years. At one point during late 2013, its stock was trading around $100. And not long ago, its share price plunged to a low of around $5. While the stock traded mostly flat during the last year, it has been performing exceptionally well in 2021.
3D Systems stock value skyrocketed more than 100 percent last Thursday after the company announced an impressive revenue outlook for the fourth quarter. It expects to report revenue in the range of $170 million to $176 million for the quarter, well above analysts’ average estimate of $140 million.
Moreover, the company also reported last week that it has completed the sale of its non-core software businesses, including Cimatron and GibbsCAM, for total proceeds of approx. $64.2 million. Speaking on the development, CEO Jeffrey Graves said in a statement, “These divestitures strengthened our balance sheet, enabling us to both pay off our debt and terminate the ATM Program much earlier than originally planned.”
3D shares continued their rally this week, with the stock climbing over 17 percent on Monday, and skyrocketing 36.21 percent on Thursday. Overall, DDD stock value has increased over 200 percent so far this year, as investors welcomed the promising revenue forecast. Many believe that the company would finally be able to end its losing streak and turn a profit very soon.”
6. Patterson Companies (NASDAQ:PDCO)
No of HFs: 18
Total Value of HF Holdings: $82 Million
Patterson Companies is known for its veterinary and dental products. Based on a report by NASDAQ, on January 29, 2021, a cash dividend payment of $0.26 per share is scheduled to be paid. This will mark the 16th quarter that PDCO has paid the same dividend. During the third quarter of 2020, the company reported consolidated net sales of approximately $1.46 billion. At the end of September, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from the second quarter of 2020.
5. Envista Holdings Corporation (NYSE:NVST)
No of HFs: 20
Total Value of HF Holdings: $417 Million
The 5th best dental stock to buy now is NVST. The top hedge fund holder of this stock is Natixis Global Asset Management’s Harris Associates which had $199 million invested in the stock at the end of September. An insider recently purchased 2,000 shares at around $22 in September 2019. The stock is up 63% since then. NVST provides dental consumables, equipment, and services to dental professionals. During the third quarter of 2020, the company reported a net income of $35.6 million or $0.22 per share.
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4. DENTSPLY International, Inc. (NASDAQ:XRAY)
No of HFs: 25
Total Value of HF Holdings: $946 Million
The top hedge fund holder of this stock is David Blood And Al Gore’s Generation Investment Management which had $845 million invested in the stock at the end of September. An insider recently purchased 2,720 shares at around $55 in June 2019. The stock is down 3% since then. On January 4, 2021, the company announced they have acquired Byte, a rapidly growing clear aligner company in an all-cash deal for $1.04 billion. Don Casey, Chief Executive Officer of Dentsply Sirona mentioned that they will utilize their collective strengths to expand patient access to quality care
“Over the past two years, we have executed against our restructuring plan, strengthening the R&D, supply chain and commercial platforms, positioning Dentsply Sirona for long-term growth. We are excited to take the next step in our evolution by bringing Byte into our organization. We have been pleased with the growth of our SureSmile clear aligner business and we are confident that adding the innovative platform of Byte adds scale for us in the important clear aligner market. We look forward to working with the talented team at Byte as we utilize our collective strengths to expand patient access to quality care and support the success of our dental partners around the world.”
3. SmileDirectClub, Inc. (NASDAQ:SDC)
No of HFs: 28
Total Value of HF Holdings: $157 Million
The 3rd best dental stock to buy now is SDC. An insider recently purchased 15,000 shares at around $8. The stock is up 62% since then. In an article, Miller Value Partners mentioned a few of their comments on the stock in their Q2 2020 investor letter.
“We sold SmileDirect to fund our other ideas. We didn’t end up holding the name long. While there are many interesting things about the business, we think the business is significantly challenged by the pandemic. Their product is highly discretionary with a high price point and certain distribution outlets closed down. The company loses money and had a challenged balance sheet. Given the risks, we preferred to deploy the capital elsewhere.”
2. Henry Schein (NASDAQ:HSIC)
No of HFs: 40
Total Value of HF Holdings: $1.23 Billion
An insider recently purchased 2,000 shares at around $60 in February 2019. The stock is up 15% since then. The company is known for its worldwide distribution of medical and dental supplies including vaccines. They recently announced their acquisition of a majority ownership position in Prism Medical Products, LLC. (PRISM), Stanley M. Bergman, Chairman of the Board and Chief Executive Officer of Henry Schein said that the partnership will allow HSIC to move closer and to interact directly with patients.
“Expanding beyond our core base of office-based physicians and entering the home health market has been a long-standing strategic goal of Henry Schein’s medical business, and with PRISM we have the ideal partner with a strong brand and a complementary business model. This partnership expands Henry Schein Medical’s continuum-of-care delivery model and allows us to move closer and to interact directly with patients. It also strengthens our relationships with the physicians who prescribe home medical supplies.
1. Align Technology, Inc. (NASDAQ:ALGN)
No of HFs: 47
Total Value of HF Holdings: $2.16 Billion
ALGN is the top dental stock to buy now. The top hedge fund holder of this stock is Principal Global Investor’s Columbus Circle Investors which had $19 million invested in the stock at the end of December. An insider recently purchased 564 shares at around $177 in August 2019. The stock is up 204% since then. In an article, RiverPark Advisors mentioned that they are expecting ALGN to grow cases by another roughly 200% over the next five years.
“For Align Technology, the story is a similar one. As we discussed in our letter from the second quarter of 2018, Align is the inventor of and the dominant player in the orthodontic clear aligner market with its Invisalign product. The roughly 1.2 million cases Align did last year – which represented the vast majority of clear aligner cases done in the world – represented only 10% of the global orthodontia market (yet was up nearly 200% from 5 years earlier). We believe that over the coming decade, the majority of global orthodontia will be done with clear aligners (and the market of orthodontia will also grow given the less invasive product and patient experience) and that Align will be the major beneficiary of this shift away from metal braces. We expect Align to grow cases another roughly 200% over the next five years resulting in a near doubling of revenue and a 250% rise in EPS.”
Please also see 12 Best Large Biotech Stocks to Buy Now and 10 Best Insurance Stocks to Buy Now.
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This article is originally published at Insider Monkey.
