In this article, we discuss the 5 best healthcare stocks to buy. If you want to read our detailed analysis of the healthcare sector, go directly to the Retirement Stock Portfolio: 10 Healthcare Stocks To Consider.
5. Pfizer Inc. (NYSE:PFE)
Number of Hedge Fund Holders: 65
Matthew Harrison of Morgan Stanley raised his 2022 EPS estimates for Pfizer Inc. (NYSE:PFE) to $4.57, due to the company’s importance in the Covid-19 vaccine booster shots. In October, the firm lifted its price on the stocks to $48, with an Equal Weight rating on the shares. Pfizer Inc. (NYSE:PFE) stands fifth on our list of the best healthcare stocks to buy.
Pfizer Inc. (NYSE:PFE) is an American multinational pharmaceutical and biotech company. At the end of Q2, Kahn Brothers was the largest shareholder of Pfizer Inc. (NYSE:PFE), with shares worth $32.2 billion. Overall, 65 hedge funds tracked by Insider Monkey reported owning stakes in the company in Q2, up from 65 in the previous quarter. The total value of these stakes is $2.35 billion.
Pfizer Inc. (NYSE:PFE) has a 12-year track record of dividend growth. The company pays an annual dividend of $1.56 per share, yielding 3.70%. Pfizer Inc. (NYSE:PFE) expects to generate $33.5 billion in Covid-19 vaccine revenue.
ClearBridge Investments mentioned Pfizer Inc. (NYSE:PFE) in its Q1 2021 investor letter. Here is what the firm has to say:
“Our underweights in health care and staples contributed to relative performance during the period. As we continue to focus the portfolio on high-conviction ideas, we sold Pfizer in late 2020, in the health care sector.”
4. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 68
Medtronic plc (NYSE:MDT) ranks fourth on our list of the best healthcare stocks to buy. The number of hedge funds tracked by Insider Monkey having stakes in the company increased in Q2 to 68, from 61 in Q1. The total value of these stakes is over $3.39 billion. Diamond Hill Capital is the largest shareholder of Medtronic plc (NYSE:MDT) in Q2, with shares worth $571 million.
Medtronic plc (NYSE:MDT), a medical device company, has a track record of consistent dividend growth. The company currently pays an annual dividend of $2.52 per share, yielding 2.06%. In fiscal Q1 2021, the company posted an EPS of $1.41, beating the estimates by $0.09. Recently, Piper Sandler lifted its price target on Medtronic plc (NYSE:MDT) to $152, while keeping an Overweight rating on the shares. The stock delivered a 12.55% return to shareholders in the past year.
3. Merck & Co., Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 79
Merck & Co., Inc. (NYSE:MRK) recently made waves as WHO announced to purchase the company’s Covid-19 pill as a part of its broader program. The company ranks third on our list of the best healthcare stocks to buy.
In October, Morgan Stanley lifted its price target on Merck & Co., Inc. (NYSE:MRK) to $88, with an Equal Weight rating on the shares. The firm’s analyst, Matthew Harrison also raised his EPS estimates for 2022 to $8.00. Merck & Co., Inc. (NYSE:MRK) pays an annual dividend of $2.60 per share, yielding 3.29%. The company’s dividend payout ratio stands at 43.77%.
Of the 873 elite funds tracked by Insider Monkey, 79 hedge funds have positions in Merck & Co., Inc. (NYSE:MRK) in Q2, the same as in the previous quarter. The total value of these stakes is over $5.29 billion.
Artisan Partners mentioned Merck & Co., Inc. (NYSE:MRK) in its Q1 2021 investor letter. Here is what the firm has to say:
“In Q1, we initiated a position in Merck, a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. We purchased Merck when the stock came under pressure in part on concerns that the newly minted Biden administration could implement regulatory changes and lower drug costs in the pharmaceutical industry. Recent, but anticipated changes to Merck’s management team have also weighed on shares, as have concerns over the company’s heavy reliance on immunotherapy treatment Keytruda. Notably, Merck is not getting much credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions. While Merck is undergoing a period of transition, we think the company’s fundamentals are strong and believe changes to management should be a catalyst for improvement.”
2. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 88
Johnson & Johnson (NYSE:JNJ), a multinational healthcare and pharmaceutical company, reported $502 million vaccine revenue in Q3 2021. In its recently announced Q3 results, the company posted an EPS of $2.60, versus the estimates of $2.35. Johnson & Johnson (NYSE:JNJ) ranks second on our list of the best healthcare stocks to buy.
At the end of Q2, Fundsmith LLP was the largest shareholder of Johnson & Johnson (NYSE:JNJ), with shares worth $1.17 billion. In addition to this, 88 hedge funds tracked by Insider Monkey were bullish on the company in Q2, valued at over $7 billion. In the previous quarter, 81 hedge funds had positions in Johnson & Johnson (NYSE:JNJ), highlighting a positive hedge fund sentiment.
Johnson & Johnson (NYSE:JNJ) has a track record of 60 years of dividend growth. The company pays an annual dividend of $4.24 per share, yielding 2.57% and with a dividend payout ratio of 52.8%. This September, Wells Fargo lifted its price target on Johnson & Johnson (NYSE:JNJ) to $187, with an Equal Weight rating on the shares.
Distillate Capital mentioned Johnson & Johnson (NYSE:JNJ) in its Q2 2021 investor letter. Here is what the firm has to say:
“The largest additions in the rebalance, Johnson & Johnson was around 50 and 40 basis points incrementally. J&J underperformed in the quarter while its normalized free cash flows held steady and so its position size was topped off to match the stable cash flows.”
1. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 105
UnitedHealth Group Incorporated (NYSE:UNH) tops our list of the best healthcare stocks to buy. The company announced its Q3 results on October 14 and posted an EPS of $4.52, beating the estimates by $0.10. UnitedHealth Group Incorporated (NYSE:UNH) reported revenue of $72.33 billion, up11.1% from the prior-year quarter.
UnitedHealth Group Incorporated (NYSE:UNH) is a healthcare and insurance company, based in Minnesota, U.S. The company has a track record of 12 years of consistent dividend growth and currently pays a dividend of $5.80 per share, yielding 1.36%. UnitedHealth Group Incorporated (NYSE:UNH) has increased its dividend by 68% in the past three years. Recently, Evercore ISI lifted its price target on UnitedHealth Group Incorporated (NYSE:UNH) to $480, with an Outperform rating on the shares.
At the end of Q2, GQG Partners was the largest shareholder of UnitedHealth Group Incorporated (NYSE:UNH), with shares worth $1.48 billion. Overall, 105 hedge funds tracked by Insider Monkey reported owning stakes in the company in Q2, up from 89 in the previous quarter. These stakes are valued at over $13 billion.
Wedgewood Partners mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its recently mentioned Q3 2021 investor letter. Here is what the firm has to say:
“UnitedHealth Group detracted from performance due to investor concerns about Medicare premiums as well as post-COVID medical cost trends. Medicare enrollment should continue to grow at double-digits at UnitedHealthcare. Meanwhile the Company’s Optum segment should be able to help bend the cost curve if indeed post-COVID volumes pick up to above pre-COVID levels. In any case, we do not think the long-term normalized trend of medical care in the U.S. has changed substantially and would look to add to our new position on any continuing short-term concerns.”
You can also take a look at 10 Best Healthcare Dividend Stocks and 10 Cheap Healthcare Stocks To Buy Now.
