Top Healthcare Stocks for January 2022

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. (UNH), Pfizer Inc. (PFE), and Abbvie Inc. (ABBV).

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, and others are rushing to develop and win approval for new COVID-19 drugs. There are also companies involved in various other ways with combating the pandemic, such as supplying products to test for and manage treatments of the virus.

Healthcare stocks have matched the performance of the broader market. In this story, the sector is represented by the Health Care Select Sector SPDR ETF (XLV), an exchange-traded fund (ETF). XLV’s total return was 27.2% over the past 12 months, the same as the Russell 1000’s total return, as of Dec. 23, 2021. The statistics in the tables below are also as of Dec. 23, 2021.

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

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.

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• Bio-Rad Laboratories Inc.: Bio-Rad Laboratories makes products and systems used to separate chemical and biological materials, as well as to analyze, purify, and identify components. The company’s products are utilized in life science research and in the chemistry and healthcare fields.
• Sage Therapeutics Inc.: Sage Therapeutics creates treatments for central nervous system disorders, including schizophrenia and major depressive disorder. On Dec. 1, 2021, Sage and Biogen Inc. (BIIB) announced positive results from a Phase 3 study evaluating the safety, tolerability, and need for repeat doses of its investigational drug zuranolone. The evaluation is part of the two companies’ development of a treatment for major depressive disorder and postpartum depression. The companies said that the study indicates zuranolone was “generally well-tolerated” with an adverse event profile consistent with earlier data.
• Organon & Co.: Organon is a pharmaceutical company. It develops and produces medicines for reproductive health, dermatology, heart disease, allergies, and other areas. On Dec. 13, Organon announced that it had completed its acquisition of Forendo Pharma, a clinical-stage drug development company focused on novel treatments in women’s health. Forendo’s lead candidate, FOR-6219, is an investigational drug entering Phase 2 clinical development for endometriosis, a tissue disorder related to the uterus. The total consideration for the acquisition is up to $954 million.

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 quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

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• Pfizer Inc.: Pfizer is a global biopharmaceutical company. It discovers, develops, makes, and sells a variety of biopharmaceutical products including medicines and vaccines. On Dec. 22, 2021, Pfizer announced that the U.S. Food and Drug Administration (FDA) had authorized the emergency use of its oral antiviral drug Paxlovid. The drug treats mild-to-moderate COVID-19 in adults and pediatric patients at least 12 years of age and weighing 88 pounds or more. To be eligible for Paxlovid treatment, individuals must receive positive results after direct SARS-CoV-2 viral testing and be at high risk for progression to severe COVID-19.
• Qiagen NV: Qiagen NV is a Netherlands-based holding company utilizes sample and assay technologies, bioinformatics, and automation systems to isolate and prepare DNA, RNA, and proteins, among other materials.
• Repligen Corp.: Repligen is a life sciences company. It develops and commercializes bioprocessing technologies and systems used to manufacture biologic drugs, which are drugs made from molecules manufactured using animal cells, plants, and living microorganisms. The company serves biopharmaceutical companies, contract manufacturers, and life sciences companies. For Q3 2021 ended Sept. 30, 2021, the company reported 130.2% YOY growth in net income on record total revenue. Repligen cited its COVID programs and gene therapy customer revenue as drivers of performance.

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

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• Moderna Inc.: Moderna is a clinical-stage biotechnology company focused on the discovery and development of messenger ribonucleic acid (mRNA) therapeutics and vaccines. It develops mRNA medicines for infectious, immuno-oncology, and cardiovascular diseases. Moderna’s COVID-19 vaccine continues to be in high demand globally. On Dec. 20, 2021, Moderna reported that its currently authorized COVID-19 booster can increase neutralizing antibody levels against the Omicron variant by 37-fold to 83-fold, depending on the dosage.
• Eli Lilly and Co.: Eli Lilly is a drug manufacturing company that develops, makes, and sells pharmaceutical products. The company’s offerings include diabetes and other endocrinology products, immunology, neuroscience, and other products.
• West Pharmaceutical Services Inc.: West Pharmaceutical Services produces integrated containment and delivery systems for injectable drugs and related healthcare products. The company offers primary packaging, reconstitution, transfer, drug delivery and containment systems.

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