If you’re seeking to invest in stocks with great long-term potential and are interested in adding some exposure to the healthcare sector, then the 15 biggest healthcare companies in USA are probably your best choice. Generally, the healthcare sector is a good investment because of its strong long-term fundamentals and history shows that healthcare stocks usually register lower declines in periods of market downturns than the broader indexes.
2017 is a good year to invest in healthcare stocks, because while they generally trade at higher valuations than the broader market, the sector is coming off a year in which it declined. The S&P 500 Health Care index declined by 4.40%, compared to a 22% gain by Financials and a 27% increase registered by the S&P 500 Energy. Healthcare stocks declined as the sector became a key issue during the 2016 Presidential campaign, with candidates on both sides promising to address the public’s concerns regarding drug pricing and health insurance. Combined with a rebound in oil prices and the election of Donald Trump in November, it’s easy to see why investors decided to shift towards Financials and Energy stocks and away from Healthcare.
However, since the beginning of the year, the sector has been gaining ground, since the new administration’s efforts to address drug pricing have been limited to empty words and tweets, and the new healthcare bill that is currently working its way through the Senate is expected to highly benefit health insurance companies. Even though Trump has blasted pharmaceutical companies for charging high prices and promised in a tweet to develop “a new system where there will be competition”, he also promised pharma companies that the FDA’s approval process for new drugs would be sped up.
Under the new healthcare bill, insurance companies will get big tax cuts and additional federal funding. In addition, states will be able to allow insurers to charge higher rates or deny insurance to people with pre-existing conditions, a rule that is currently part of the Affordable Care Act. And while the so-called “Mainstream Media” is ringing alarm bells that the new bill will lead to 24 million more people being without insurance by 2026 than under the existing law, investors seem to have factored that in and are still happy, as stocks of health insurance companies have soared since the beginning of the year. So, while the new healthcare bill might be mean, especially to old, poor, and sick Americans, it does make health insurers a good investment opportunity.
Now that it’s a bit more clear why the healthcare sector represents an interesting investment, we can take a look at what stocks to chose to invest in. Of course, there are many healthcare-focused ETFs that can provide exposure to a basket of healthcare stocks, but this list of the 15 biggest healthcare companies in USA, which includes several of the 10 largest health insurance companies in America also has many interesting ideas. The companies on the list are taken from the Fortune 500 and are sorted based on their revenue. In addition, we are going to mention what the smart money investors that we track at Insider Monkey as part of our market-beating investment strategy think about the companies in question.
Check out the list beginning on the next page.