In this article, we will take a look at the 10 best healthcare stocks for the long term.
The healthcare sector is one of those rare, evergreen areas of the industry that refuse to waver even when the entire market is shaking. According to a Credit Suisse report, the healthcare industry remained strong in 2022 despite the global macro downturn. The report said that as of November 28, 2022, the industry’s YTD return in 2022 was -6.2%, “substantially outperforming” broader equity markets.
The report said that there are several factors that make the healthcare sector immune to the global macroeconomic situation. One of the key growth drivers in the industry is the problem of aging population. An aging population drives growth for medicines, healthcare services and related equipment and this space is not as affected by inflation or rate hikes as other parts of the market.
According to McKinsey, healthcare profit pools are expected to grow at a 4% CAGR from 2021 through 2026. The firm said that inflation and high interest rates caused it to cut its initial estimates for this growth. While McKinsey believes the industry will have to face challenges in 2023, it said the healthcare space will see recovery in 2024. Some areas of the healthcare industry are expected to see rapid growth, according to McKinsey. These include healthcare services providers, software platforms for patient engagement and clinical decision support and specialty pharmacy within pharmacy services.
The healthcare sector will continue to pour billions into long-term growth pipelines in high-growth streams like infectious diseases, cancer, virology and neurological diseases. These investments continue to make healthcare and biotech sectors attractive areas for investors where they can expect long-term return on their investments.
Healthcare stocks didn’t have a strong start in 2023, amid rising worries that the coronavirus is making a comeback. Non-essential healthcare companies lose demand of their products and services during lockdowns as patients postpone or cancel their non-emergency appointments. However, the outlook for the sector remains strong for the long term. That’s why in this article our focus would be long-term healthcare and biotech stocks to invest in.
Photo by National Cancer Institute on Unsplash
Our Methodology
For this article we used the Finviz stock screener and picked healthcare stocks that have PE ratios (TTM basis) under 20, sales growth of over 25% on a quarter-over-quarter basis and EPS growth of over 25% on a quarter-over-quarter basis. These high growth, low PE stocks have some long-term growth catalysts that can lift their stock prices in the future. We have discussed these growth catalysts and gave a brief overview of these companies’ products. PE ratios (TTM) were taken from Yahoo Finance.
10 Best Healthcare Stocks For the Long Term
10. Valneva SE (NASDAQ:VALN)
PE Ratio (TTM): 8.38
Number of Hedge Fund Holders: 1
Valneva SE (NASDAQ:VALN) is a French biotech company that has some short-term growth catalysts. In December, Valneva SE (NASDAQ:VALN) rose after the company said it completed rolling submission of an application to the FDA for its single-shot chikungunya vaccine for people aged 18 years and above. Valneva SE (NASDAQ:VALN) said this vaccine was backed by a phase 3 study.
Benjamin A. Smith’s Laurion Capital Management owns a $251,000 stake in Valneva SE (NASDAQ:VALN) as of the end of the September quarter.
9. Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA)
PE Ratio (TTM): 6.73
Number of Hedge Fund Holders: 13
Shares of Bermuda-based Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) have gained about 27% over the past year. Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) is known for ARCALYST. Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) paid $5 million upfront to acquire this drug from Regeneron (REGN) back in 2017. The treatment addresses cryopyrin-associated periodic syndromes. Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) has several other solid growth catalysts that can lift its stock price in the coming months and years.
In September 2022, Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) entered into an agreement with Roche for the development and commercialization rights to Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA)’s pipeline asset vixarelimab, a fully human monoclonal antibody targeting oncostatin M receptor beta
As of the end of the third quarter, 13 hedge funds tracked by Insider Monkey had stakes in Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA). The total value of these stakes was $140 million. The biggest stakeholder of Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA) was Lei Zhang’s Hillhouse Capital Management which owns a $37.5 million stake in Kiniksa Pharmaceuticals, Ltd. (NASDAQ:KNSA).
8. Vir Biotechnology, Inc. (NASDAQ:VIR)
PE Ratio (TTM): 2.97
Number of Hedge Fund Holders: 18
Vir Biotechnology, Inc. (NASDAQ:VIR) is operating in the infectious disease space. In November, Vir Biotechnology, Inc. (NASDAQ:VIR) posted strong Q3 results, driven by its partnership with GSK. Vir Biotechnology, Inc. (NASDAQ:VIR)’s revenue in the quarter more than doubled in the period. Revenue in the period came in at $374.6 million, crushing estimates y $260.32 million. Vir Biotechnology, Inc. (NASDAQ:VIR) rose 6.7% to $23.27 after hours.
Vir Biotechnology, Inc. (NASDAQ:VIR) is making products to treat Covid-19, Hepatitis B, Influenza and several other viral diseases. It can be a strong pick for the long term since Vir Biotechnology, Inc. (NASDAQ:VIR) has several growth catalysts. As of the end of the third quarter, 18 hedge funds tracked by Insider Monkey reported having stakes in Vir Biotechnology, Inc. (NASDAQ:VIR), compared to 13 funds in the previous quarter.
7. DocGo Inc. (NASDAQ:DCGO)
PE Ratio (TTM): 14.95
Number of Hedge Fund Holders: 19
DocGo Inc. (NASDAQ:DCGO) is operating in the lucrative market of telehealth services. According to Grand View Research, the global telehealth market size was valued at about $83.5 billion in 2022 and this figure is expected to soar to $101.2 billion by 2023. Amid aging population and people’s changing preferences, the demand of telehealth services is expected to rise. DocGo Inc. (NASDAQ:DCGO) offers telehealth services and its platform is fully integrated with some of the largest Electronic Medical Records [EMR] systems in the country. DocGo Inc. (NASDAQ:DCGO) also uses AI to predict any emergencies and uses the technology to find solutions to problems like high traffic on roads and possible delays in reaching patients in emergencies.
As of the end of the third quarter, 19 hedge funds tracked by Insider Monkey reported having stakes in DocGo Inc. (NASDAQ:DCGO). The total value of these stakes was $71.5 million.
6. Immatics N.V. (NASDAQ:IMTX)
PE Ratio (TTM): 15.52
Number of Hedge Fund Holders: 25
Immatics N.V. (NASDAQ:IMTX) uses the T cell receptor [TCR]-based technology to find treatments for cancer. Immatics N.V. (NASDAQ:IMTX)’s treatments target solid tumors. Immatics N.V. (NASDAQ:IMTX)’s treatments are expected to take a long time to reach final approvals. There is also risk involved, but long-term returns of Immatics N.V. (NASDAQ:IMTX) could be beneficial for those who can wait. In October 2022, Immatics N.V. (NASDAQ:IMTX) jumped after the company posted interim data for its solid tumor candidate IMA203. The results showed potential of the TCR-engineered cell therapy as a multi-tumor target in a Phase 1 trial.
As of the end of the third quarter of 2022, 25 hedge funds in Insider Monkey’s database of 920 funds had stakes in Immatics N.V. (NASDAQ:IMTX). The total value of these stakes was $172 million. The biggest stakeholder of Immatics N.V. (NASDAQ:IMTX) was Julian Baker and Felix Baker’s Baker Bros. Advisors, with a stake worth over $44 million.
5. AbCellera Biologics Inc. (NASDAQ:ABCL)
PE Ratio (TTM): 12.15
Number of Hedge Fund Holders: 26
AbCellera Biologics Inc. (NASDAQ:ABCL) is a Canadian biotech company. AbCellera Biologics Inc. (NASDAQ:ABCL) is operating in the human antibodies space. Earlier in December AbCellera Biologics Inc. (NASDAQ:ABCL) rose to limelight after it signed a multi-target strategic collaboration with AbbVie (NYSE:ABBV) to discover antibody therapies. According to the deal AbCellera Biologics Inc. (NASDAQ:ABCL)’s antibody discovery and development engine will be used to make development candidates for up to five targets selected by AbbVie across multiple indications.
Hedge funds are piling into this healthcare stock which seems a promising pick for the long term. As of the end of the September quarter, 26 hedge funds reported having stakes in AbCellera Biologics Inc. (NASDAQ:ABCL), compared to 17 funds in the previous quarter. The total value of these stakes was $313 million. The biggest stakeholder of AbCellera Biologics Inc. (NASDAQ:ABCL) was Julian Baker and Felix Baker’s Baker Bros. Advisors, which owns a stake worth over $103 million in AbCellera Biologics Inc. (NASDAQ:ABCL).
4. Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY)
PE Ratio (TTM): 19.46
Number of Hedge Fund Holders: 27
Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) is working to develop treatments for neurological diseases. Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) has gained about 41% over the past 12 months and analysts believe it can run further. Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) is known for wakix (pitolisant), which is used to address excessive daytime sleepiness. This product alone produced $117 million in revenue in the third quarter, up 45% from the previous year. Some other important possible catalysts for Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY) from its pipeline include treatments for Myotonic Dystrophy, Idiopathic Hypersomnia and pediatric narcolepsy.
As of the end of the third quarter, 27 hedge funds tracked by Insider Monkey reported having stakes in Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY). The total value of these stakes was $338 million. In the previous quarter, 20 funds had stakes in Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY). This shows that hedge fund sentiment is strong for Harmony Biosciences Holdings, Inc. (NASDAQ:HRMY).
3. QuidelOrtho Corporation (NASDAQ:QDEL)
PE Ratio (TTM): 5.26
Number of Hedge Fund Holders: 29
QuidelOrtho Corporation (NASDAQ:QDEL) is a California-based diagnostic healthcare products company. Earlier this month, QuidelOrtho Corporation (NASDAQ:QDEL) posted strong Q4 revenue guidance. QuidelOrtho Corporation (NASDAQ:QDEL) expects its revenue to come in the range of $853 million to $868 million, significantly above the consensus of $764.27 million. QuidelOrtho Corporation (NASDAQ:QDEL) said its COVID-19 product revenue was expected to total in the range of $124 million to $134 million. For full-year 2022, QuidelOrtho’s revenue is expected to be between $4.038 billion to $4.053 billion, above the consensus of $3.95 billion.
As of the end of the third quarter, 29 hedge funds tracked by Insider Monkey reported having stakes in QuidelOrtho Corporation (NASDAQ:QDEL), compared to 37 funds in the previous quarter. The total value of these stakes was $692 million.
2. InMode Ltd. (NASDAQ:INMD)
PE Ratio (TTM): 15.72
Number of Hedge Fund Holders: 30
InMode Ltd. (NASDAQ:INMD) is an Israeli healthcare company operating in the medical aesthetics space. Earlier this month, InMode Ltd. (NASDAQ:INMD) rose after the company posted strong guidance. InMode Ltd. (NASDAQ:INMD) said its Q4 revenue will fall in the range of $133.2 million to $133.4 million, while its full-year 2022 revenue will total between $453.9 million and $454.1 million. The consensus estimate for the fourth quarter revenue was $129.45 million. InMode Ltd. (NASDAQ:INMD) said its EPS in the quarter was expected to come in the range of $0.73-$0.74, as compared to the consensus of $0.65. InMode Ltd. (NASDAQ:INMD) will release its quarterly results on February 14.
Jim Simons’ Renaissance Technologies is the biggest stakeholder of InMode Ltd. (NASDAQ:INMD) as of the end of the third quarter. The fund has a $67 million stake in InMode Ltd. (NASDAQ:INMD). Another notable stakeholder in InMode Ltd. (NASDAQ:INMD) according to Insider Monkey’s database is Israel Englander’s Millennium Management which owns a $31.3 million stake. Overall, out of the 920 hedge funds tracked by Insider Monkey, 30 hedge funds had stakes in InMode Ltd. (NASDAQ:INMD) as of the end of the third quarter.
1. Exelixis, Inc. (NASDAQ:EXEL)
PE Ratio (TTM): 17.39
Number of Hedge Fund Holders: 35
Alameda, California-based Exelixis, Inc. (NASDAQ:EXEL) is known for its treatment for medullary thyroid cancer. Exelixis, Inc. (NASDAQ:EXEL) is also working on products related to metastatic cancer. Earlier this month, Exelixis, Inc. (NASDAQ:EXEL) posted Q4 and 2022 guidance. For the last quarter of 2022, Exelixis, Inc. (NASDAQ:EXEL) expects its revenue to total $415 million, as compared to the analyst consensus of $415.86 million. For 2022, Exelixis, Inc. (NASDAQ:EXEL) sees its revenue to come in at $1.6 billion, versus the consensus of $1.6 billion. For 2023, Exelixis, Inc. (NASDAQ:EXEL)’s revenue is expected to fall between $1.775 billion to $1.875 billion, versus the consensus of $1.83 billion.
Hedge fund sentiment is strong for Exelixis, Inc. (NASDAQ:EXEL). As of the end of the September quarter, 35 out of the 920 hedge funds tracked by Insider Monkey reported having stakes in Exelixis, Inc. (NASDAQ:EXEL), compared to 28 funds in the previous quarter. The total value of these stakes was $35 million.
You can also take a peek at 12 Best Holding Company Stocks To Invest In and 12 Best Bid Data Stocks To Buy.
Suggested articles:
- 13 Best Communication Services Stocks To Invest In
- 12 Best DRIP Stocks To Own
- 9 Famous Pyramid Schemes in US History
Disclosure: None. 10 Best Healthcare Stocks For the Long Term is originally published on Insider Monkey.
