6 Best Healthcare Stocks To Invest In for 2023
Healthcare is one of the 11 core industries of the S&P 500. It’s also one of the largest, with an estimated market value of $7.4 billion globally. Given the economic worth, it’s no surprise it’s a competitive space. So it’s important to isolate the gold standard of companies for a portfolio.
What Are the Best Healthcare Stocks To Buy Now?
Here are the best healthcare stocks for creating a well-rounded portfolio right now:
- CVS Health Corp. (CVS)
- UnitedHealth Group Inc. (UNH)
- Maravai LifeSciences Holdings Inc. (MRVI)
- InMode Ltd. (INMD)
- Johnson & Johnson (JNJ)
- Veeva Systems Inc. (VEEV)
Read: 3 Things You Must Do When Your Savings Reach $50,000
1. Best Overall Healthcare Stock for Investment Portfolios: CVS Health Corp. (CVS)
CVS Health leaves no stone unturned. It has nearly 10,000 pharmaceutical stores with prescription drug coverage, clinic locations for taking care of patients, tailored insurance and health plans, and virtual telehealth services. Its stock price has grown about 13-fold in the past 20 years, and CVS also rewards investors with a 3.53% dividend. CVS’ diversified portfolio of services across healthcare and steady income streams make it a great addition to any portfolio.
- Price: $68.85 per share
- Market Cap: $89.72 billion
- P/E Ratio: 22.87
- Revenue Growth: 10% year over year
- Dividend Yield: 3.53%
2. Best-Performing Healthcare Stock: UnitedHealth Group Inc. (UNH)
UnitedHealth Group is the largest publicly traded healthcare company based on its market capitalization. It provides medical insurance plans in the U.S. for consumers and businesses — a growing market valued at more than $2 trillion. Millions of people, including small and large organizations and consumers of every variety, are serviced by UnitedHealth.
- Price: $486.86 per share
- Market Cap: $453.28 billion
- P/E Ratio: 22.27
- Revenue Growth: 13% year over year
- Dividend Yield: 1.34%
3. Best Small-Cap Healthcare Stock: Maravai LifeSciences Holdings Inc. (MRVI)
Founded in 2014, Maravai LifeSciences researches and develops preventative vaccines, drug therapies and diagnostics for human diseases.
Maravai was a stand-out performer during the COVID-19 pandemic due to its model. Over a two-year period, it tripled its revenue and earnings. But despite a return-to-normal world, Maravai has continuously outperformed. It has beaten analysts’ expectations for four of the last five quarters. Even as the healthcare stock showcases persistent demand for its products and services, Maravai trades at a price-earnings ratio of just 8.33. Investors appear to be getting a growing company at a steal, but its value as an investment will be determined by its ability to sustain such rapid growth.
Another factor plaguing Maravai’s stock price is its leadership changes. A lawsuit Maravai was facing created uncertainty last year as the company awaited an outcome. However, Maravai announced in a Dec. 1, 2022, Securities and Exchange Commission filing that the parties had agreed “to voluntarily dismiss the lawsuit.”
- Price: $15 per share
- Market Cap: $3.72 billion
- P/E Ratio: 8.33
- Revenue Growth: 10% year over year
- Dividend Yield: None
4. Best Long-Term Healthcare Stock: InMode Ltd. (INMD)
InMode is a medical devices company specializing in surgical procedures. Its array of product offerings includes face, neck and body contouring along with hair removal and treatment for vascular complications. InMode more than doubled its revenue and earnings from 2020 to 2022 and expects revenues to increase to $525 million to $530 million in 2023.
With an 83.78% gross margin on its products and services and double-digit growth during a bear market, InMode appears to be priced attractively right now for long-term investors.
- Price: $34.04 per share
- Market Cap: $2.81 billion
- P/E Ratio: 16.44
- Revenue Growth: 27% year over year
- Dividend Yield: None
5. Best Dividend Healthcare Stock: Johnson & Johnson (JNJ)
Johnson & Johnson services consumer health and well-being, innovative health technology and pharmaceutical segments. Popular brands under its wing include Janssen, Aveeno, Listerine and Neutrogena.
In September 2022, Johnson & Johnson announced a $5 billion share repurchase, which it saw as good value. In the first quarter of 2023, the company reported a 7.6% increase in worldwide sales and increased its guidance based on strong performance.
Johnson & Johnson has experienced steady incremental growth over the long term since its introduction to capital markets, and its stock has provided reliable dividend returns for many years.
- Price: $159.55 per share
- Market Cap: $446.45 billion
- P/E Ratio: 32.81
- Revenue Growth: 1.25% year over year
- Dividend Yield: 2.94%
6. Best SaaS Healthcare Stock: Veeva Systems Inc. (VEEV)
Veeva Systems provides software as a service for major healthcare companies. Its lineup of customers includes multibillion-dollar behemoths such as Bristol Myers Squibb, Eli Lilly and Moderna. Veeva has carved out a niche as an enterprise solution for healthcare providers to manage their data and workflows. Its subscription strategy has also made its products very sticky once companies sign up, contributing to extremely high net margins of around 72% compared to 57% for the industry overall.
- Price: $176.55 per share
- Market Cap: $28.28 billion
- P/E Ratio: 56.08
- Revenue Growth: 16% year over year
- Dividend Yield: None
Final Take
The above selection contains some of the best healthcare stocks held by some of the world’s largest institutions and some future-relevant companies. If investing in a single stock seems like too much risk is being placed on a single bet, there are ETF options that give exposure to a diverse basket of healthcare stocks.
The Health Care Select Sector SPDR Fund ETF (XLV) along with the iShares U.S. Healthcare ETF (IYH) are among the best choices to diversify the risk associated with investments in healthcare stocks.
FAQ
Here are some common questions investors ask about healthcare stocks.- Will healthcare stocks do well in 2023?
- As a basic need for most people, healthcare stocks tend to perform well in bear markets or recessionary environments. Although a recession may loom, these services aren't negotiable for most people. As such, healthcare stocks can add stability to an investment portfolio in hard times.
- Is it good to invest in healthcare?
- Generally, yes. Healthcare stocks not only help investors diversify by sector, but they can decrease volatility for portfolios.
- Where can I invest in healthcare?
- Investors can browse individual healthcare stocks or ETFs through their brokerage to get exposure for their investment portfolio.
- What is the best healthcare ETF?
- The Health Care Select Sector SPDR Fund ETF (XLV) is one of the largest — by assets under management — and widely held healthcare ETFs.
Daria Uhlig contributed to the reporting for this article.
Data is accurate as of May 15, 2023, and is subject to change.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- Securities and Exchange Commission. 2022. "Maravai LifeSciences Holdings, Inc."
- InMode. 2023. "InMode Reports First Quarter 2023 Financial Results; Quarterly Revenue of $106.1M Represents 23.5% Year-Over-Year Growth."
- Johnson & Johnson. 2023. "1st Quarter 2023 Earnings Call."
