Top Healthcare Stocks for February 2021

Healthcare, one of the largest and most complex sectors, is comprised 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). Investors are watching the healthcare sector closely because some of these companies have received regulatory approval for drugs to treat COVID-19. Also, other companies are supplying products to test for and manage treatment of the virus, while many others are rushing to develop and win approval for new COVID-19 drugs.

Healthcare stocks, as represented by the Health Care Select Sector SPDR ETF (XLV), have underperformed the broader market. XLV has provided investors with a total return of 14.5% over the past 12 months, below the Russell 1000’s total return of 19.5%, as of January 15, 2021. The statistics in the tables below are as of January 15.

Here are the top 3 healthcare stocks with the best value, the fastest growth, and the most momentum.

Best Value Healthcare Stocks

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 you’re paying less for each dollar of profit generated.

Source: YCharts

• Bio-Rad Laboratories Inc.: Bio-Rad is a maker of life science research products and analytical instrumentation. These tools are used to separate and analyze complex chemical and biological materials.
• Biogen Inc.: Biogen focuses on the discovery, development, and commercialization of pharmaceutical treatments, with a strong focus on the fields of neurology, immunology, and oncology.
• CVS Health Corp.: CVS Health is an integrated pharmacy healthcare provider. The company provides services including pharmacy benefit management, mail order delivery, and retail sales. It also operates disease management programs and retail clinics. CVS announced on November 6 the appointment of Karen S. Lynch to the roles of president and chief executive officer (CEO), effective February 1, 2021. She will replace Larry J. Merlo, who will be retiring this spring. CVS and Walgreens have come under intense criticism from federal health officials in January for the slow rollout of COVID-19 vaccinations for residents and workers at nursing homes, with only a quarter of the 4.7 million doses completed, according to the Centers for Disease Control (CDC). Under a federal program, CVS and Walgreens teams have been deputized to administer the doses.

Fastest Growing Healthcare Stocks

These are the healthcare stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.

Source: YCharts

• Insulet Corp.: Insulet is a medical device company. It develops and manufactures an insulin infusion system for people with insulin-dependent diabetes.
• Horizon Therapeutics PLC: Horizon Therapeutics is an Ireland-based biopharmaceutical company that researches, develops, and markets late-stage biopharmaceutical therapies for the treatment of pain, inflammation, orphan diseases, and other illnesses.
• Quidel Corp.: Quidel develops and manufactures diagnostic healthcare products and solutions. The company offers diagnostic solutions that aid in the detection and diagnosis of critical diseases and other medical conditions. Quidel received emergency use authorization (EUA) approval from the U.S. Food and Drug Administration (FDA) in December to market two of its COVID-19 diagnostic tests: the QuickVue Sars Antigen and Solana SARS-CoV-2 Assay tests. 

Healthcare Stocks with the Most Momentum

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

Source: YCharts

• Moderna Inc.: Moderna is a clinical stage biotechnology company focused on the discovery and development of messenger RNA therapeutics and vaccines. It develops mRNA medicines for infectious, immuno-oncology, and cardiovascular diseases. In January, Moderna announced that its vaccine against COVID-19 has been authorized in a number of different regions across the world by respective authorities: in Switzerland by Swissmedic; in Great Britain by the U.K. Medicines and Healthcare products Regulatory Agency; in Europe by the European Commission; and in Israel by the Israeli Ministry of Health.   
• Quidel Corp.: See above for company description.
• Teladoc Health Inc.: Teladoc Health provides healthcare services. It offers diagnoses, treatment recommendations, and prescribes medication for routine medical issues through phone and video consultations. The company announced on October 30 that it had completed its acquisition of biotechnology company Livongo Health Inc. Under the financial terms of the merger, Livongo shareholders received 0.5920x shares of Teladoc Health plus cash of $11.33 for each Livongo share. When Teladoc’s acquisition was announced in August, it was valued at $18.5 billion. 

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