One market truism is that healthcare tends to outperform during Democratic administrations, while defense companies tend to do better under Republicans. Therefore, investors should consider healthcare stocks.Due to COVID, many put off procedures and doctor's visits, so it should also benefit from some sort of pent-up demand when the economy normalizes. Additionally, as employment comes back, more people will be insured which will also lead to increased demand for healthcare.
The following healthcare stocks are worth considering in ’21: Abbott Laboratories (ABT), AbbVie (ABBV), Medtronic (MDT), Zoetis (ZTS), and Anthem (ANTM).
Abbott Laboratories (ABT)
ABT develops, makes, and sells healthcare products. The company has four distinct segments: Diagnostic products, pharmaceutical products, vascular products, and nutritional products. ABT is currently trading at $110, merely $5 away from its 52-week high of $115.14. However, the stock has a reasonable forward P/E ratio of 25.29, meaning it might have a ceiling that is significantly higher than its 52-week high.
The top analysts are bullish on ABT, setting an average price target of $120.57, meaning there is around 10% upside to go. Of the nine analysts who have studied the stock, none recommend selling, seven recommend buying and two recommend holding. The POWR Ratings reveal ABT has "A" grades in the Trade Grade, Peer Grade, and Buy & Hold Grade components. ABT is ranked in the top five of 239 stocks in the Medical - Pharmaceuticals space. The stock provides a dividend of 1.30%.
Though ABT's net earnings of $2.3 billion are impressive, this figure represents nearly a 12% decline from the year prior. It is quite interesting to note ABT's nutritional segment's sales are up more than 3% on the year. Furthermore, the company's diagnostic segment's sales are up more than 14%. The FDA recently approved an ABT antigen test that produces rapid results yet costs a mere $25.
ABBV is known for its Humira product yet the company is expanding its horizons following the acquisition of Allergan, a Botox maker, in the spring of ’20. ABBV’s Imbruvica cancer drug along with its immunology drugs will also help the company generate revenue moving forward. ABBV has a surprisingly low forward P/E ratio of 8.96, meaning it is likely undervalued at its current trading price of $110 through the stock's 52-week high is only 74 cents higher than its current trading level.
The analysts agree that ABBV is undervalued, setting an average price target of $119.67 for the stock, indicating it has the potential to climb more than 9%. Of the dozen analysts who have studied the stock, 11 recommend buying, one recommends holding and none advise selling.
Take a look at the POWR Ratings and you will find ABBV has "A" grades in the Peer Grade, Trade Grade, and Buy & Hold Grade components. ABBV is ranked fifth of 239 stocks in its segment. Add in the fact that ABBV provides a 4.33% dividend and you have all the more reason to be bullish about the stock.
MDT is the synthesis of Covidien and the original Medtronic. These businesses have combined to operate in four spaces: Restorative therapies, Minimally invasive therapies, and Cardiac and Vascular. MDT, currently trading at $118, is a mere $4 away from its 52-week high yet its forward P/E ratio is still a fairly appealing 28.17. The company provides a 1.96% dividend.
The analysts have established an average price target of $129.26 for MDT, indicating it has the potential to pop by another 10%. Of the 20 analysts who have studied the stock, 17 recommend buying, three recommend holding, and none advise selling.
Take a look at the MDT POWR Ratings and you will be impressed. The stock has "A" grades in the Peer Grade, Trade Grade, Industry Rank, and Buy & Hold Grade components. MDT is ranked first of 185 stocks in its segment. MDT could easily soar past its 52-week high in the months ahead when demand for its medical equipment increases as previously deferred elective surgeries are likely to be performed in the year ahead.
ZTS is the result of Pfizer spinning off its pet health business. ZTS researches develop, manufactures, and sells diagnostic products, vaccines, and medicines for pets as well as livestock, horses, sheep, fish, poultry, and swine.
Though the pandemic has impacted ZTS sales about livestock, its pet products are still selling like hotcakes. The bottom line is we are likely months away from people ordering entrees featuring the animal flesh treated by ZTS products at the same clip those dishes were ordered before the pandemic began. However, that time is coming and it will benefit ZTS.
The top analysts have established an average price target of $188.80 for ZTS, meaning it is likely to increase by more than 12% moving forward. ZTS has "A" grades in the Peer Grade, Trade Grade, and Buy & Hold Grade POWR Rating components. Furthermore, the stock is ranked in the top 10 of 239 in its segment.
ANTM is one of the country’s largest publicly owned managed care organizations. ANTM also serves as an independent Blue Cross Blue Shield Association licensee. ANTM has drawn investor interest following the election as there is an assumption more people will receive and pay for healthcare now that Joe Biden is president.
ANTM is profitable, raking in $30 billion per quarter, a figure that represents a 16% hike on a year-over-year basis. All in all, ANTM has a decade straight of revenue growth. If you still aren't convinced ANTM is a solid investment, look no further than its exemplary POWR Ratings. ANTM has "A" grades in the Industry Rank, Trade Grade, and Buy & Hold Grade components along with a #2 ranking of eight stocks in the Medical - Health Insurance space.
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ABT shares were trading at $110.57 per share on Friday morning, up to $0.53 (+0.48%). Year-to-date, ABT has gained 1.39%, versus a 0.85% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management.5 Top Healthcare Stocks for 2021 appeared first on StockNews.com