Best blue chip healthcare stocks to buy and hold in 2024

By:
on Apr 25, 2024
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  • The healthcare industry is expected to continue growing as the population grows.
  • The total healthcare spending in the US stands at over $4.3 trillion each year.
  • We identify some of the top blue chip companies to invest in.

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The healthcare industry is one of the biggest in the United States and other countries. In the US, the total Medicare expenditure stood at over $927 billion in 2022 and the trend is continuing as the population ages. 

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It is estimated that the total healthcare cost in the US came in at over $4.3 trillion. Most of these costs were in the hospital care followed by physician and clinical services and prescription services. 

Healthcare stocks are highly popular among investors because of the industry’s growth and the huge margins. So, here are some of the best companies to invest in. 

SPY ETF vs healthcare ETFs

SPY ETF vs top healthcare ETFs

Intuitive Surgical

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Intuitive Surgical (NASDAQ: ISRG) is one of the best-performing companies in the healthcare industry. It provides a product known as Da Vinci, which is used by robotic solutions used by surgeons. 

It makes money by selling the equipment and by recurring revenue. The recurring revenues come from the sale of instruments and accessories and servicing of the Da Vinci equipment.

The most recent results showed that the company’s revenue rose by 16% in the last quarter. It sold 313 da Vinci surgical equipment while the installed base rose to almost 9,000.

Intuitive Surgical is a good investment because of its strong market share in the surgery industry, its recurring revenues, and its strong balance sheet. It has over $7.32 billion in cash and short-term investments.

Intuitive Surgery has been a good investment as its stock has jumped by over 825% in the past ten years.

HCA Healthcare

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HCA Healthcare (NYSE: HCA) is another top company to invest in. It is one of the leading operators of hospitals in the US with 178 general acute care hospitals and six behavioral hospitals. It also has many outpatient facilities in the US. 

HCA Healthcare’s business has been doing well in the past few years. Its total revenue rose from $51 billion in 2019 to more than %64 billion in 2023.It is also a highly profitable company, generating a net profit of over $5.2 billion in 2023.

HCA Healthcare is a great rewarder of its shareholders. In the first place, it has continued to reduce its outstanding shares. Data shows that it now has over 265 million outstanding shares, down from 341 million in 2019. 

The biggest risk that HCA has is its huge debt burden of over $36 billion, which could affect its returns to its shareholders.

WELL Health Technologies

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WELL Health Technologies (TSX: WELL) is another top healthcare company to buy and hold. It is a Canadian company that operates hundreds of outpatient medical clinics in Canada. 

In addition to its physical locations, the company provides virtual servies like telehealth, billing and revenue cycle management, and e-prescription to other firms. It also has a partnership with Healwell AI, a company that I covered recently

WELL Health’s business is growing organically and through acquisitions. In March, the company said that its total revenue rose to C$776 million in 2023 from C$569 million a year earlier.

It is also a profitable company that made a net profit of over C$16.6 million. The management is now focusing on sustainable revenue and profitability growth, a move that could lead to fewer acquisitions.

DaVita Healthcare Partners

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DaVita Healthcare (NYSE: DVA) is another quality healthcare stock to buy. It is one of the few companies that specializes in treating diabetes, a disease that affects millions of people around the world.

I wrote about DaVita last year as investors dumped the stock because of the popularity of weight loss products like Wegovy and Ozempic. At the time, I cautioned that the sell-off was an overreaction.

DaVita stock has done well in the past few years. It has jumped by over 50% in the past 12 months and by more than 145% in the past five years. This surge has brought its market cap to over $11 billion. 

The company will likely continue showing some slow growth in the coming years. It will also continue rewarding its shareholders through buybacks. 

The other quality blue-chip healthcare stocks to buy are the likes of Thermo Fisher Scientific, Danaher, Cencora, and Edwards Lifesciences.

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