In today’s dynamic market, many investors are paying attention to the healthcare sector. The segment is known for its resilience and potential for growth. The ongoing global health crisis has only heightened this focus. Many are now seeking the best healthcare stocks to add to their portfolios. Numerous giants in the sector are trading at premium valuations. However, there are also a plethora of undervalued healthcare stocks that offer an attractive entry point.
In addition to being affordable healthcare investments, these under-the-radar companies present an opportunity for significant returns.
From biotechnology firms developing innovative therapies to companies revolutionizing medical devices and services, our list of cheap healthcare stock picks is curated with a forward-thinking approach. So, without further delay, let us look at some of the best healthcare stocks to buy.
UnitedHealth Group (UNH)
UnitedHealth Group (NYSE:UNH) appears to be a beacon in the storm for savvy investors eyeing undervalued healthcare stocks. Although faced with a 6.52% dip in year-to-date return, a recent earnings report shows a glimmer of resilience. There was a 15.65% surge in revenue to $92.9 billion and a 7.97% climb in net income to $5.47 billion in the second quarter of 2023. This reveals a company robust and buoyant amidst a sea of challenges. However, sailing is not all smooth, as regulatory risks continue to loom large on the horizon.
UnitedHealth Group stands out as an attractively priced compounder in a world where affordable healthcare investments are as sought after as a desert oasis. The current landscape, though dotted with challenges, is rife with opportunities for the discerning investor. One such challenge is CVS’s (NYSE:CVS) recovery journey after a PBM contract loss. Another is Humana’s lawsuit against HHS over the Medicare clawback rule. Indeed, the path to cheap healthcare stock picks is paved with caution and promise.
Balancing the scales of regulatory risks against the allure of strong financial performance and enticing pricing is key for anyone venturing into healthcare investments. This sector represents an exciting yet unpredictable terrain.
Intuitive Surgical (ISRG)
Intuitive Surgical (NASDAQ:ISRG) is not just a company; it’s a revolution in the making. A leader in minimally invasive care, the company is transforming how healthcare is delivered with its advanced robotic systems.
The recent FDA approval of the da Vinci SP system for simple prostatectomies solidifies its role as a revolutionary force in the healthcare industry. Despite this, the company’s stock experienced a 5% drop after-hours trading. However, this brief decline should not eclipse the company’s ongoing commitment to innovation. Their continuous efforts towards progress are noteworthy and essential to consider. After all, true value often comes at a price.
For investors on the hunt for affordable healthcare investments, Intuitive Surgical stands out as a top contender. Despite the necessary costs associated with its groundbreaking innovations, the company remains an appealing option in the sea of cheap healthcare stock picks. Suppose you want to diversify your portfolio while contributing to a future where advanced, minimally invasive care is the norm. In that case, Intuitive Surgical might be the investment you’ve been searching for all this time.
Teladoc Health (TDOC)
Teladoc Health (NYSE:TDOC) is gaining traction in the market and could be a top healthcare stock. Even though there has been a 10% decrease in the past half-year, the latest quarterly results displayed a hopeful 10% rise in revenue to $652.4 million, slightly surpassing predictions by 0.5%. Teladoc’s collaboration with Microsoft to address clinical documentation through artificial intelligence is also a key development. This, along with the forecast that AI will constitute 11% of healthcare budgets in 2024, highlights the tactical decisions Teladoc is making.
The expansion of Amazon Clinic nationwide contributed to the stock’s recent fall, but Teladoc quickly recovered with a 6% increase following the earnings beat and positive 2023 guidance. The expanded strategic partnership with Microsoft (NASDAQ:MSFT) also positions Teladoc as a powerful AI combo in the healthcare sector. AI is likely to spur healthcare deflation. As a result, Teladoc is a strong player in leveraging technology to revolutionize healthcare services.
With the rise of AI in healthcare, Teladoc is positioning itself as a front-runner in the industry. Although the past quarter has declined, the company’s strategic moves are promising. Additionally, technology advancements and strong partnerships indicate a positive trajectory for the future. Investors looking for cheap healthcare stock picks should consider the potential of Teladoc as it continues to innovate and expand its services in an ever-evolving market. With the support of strategic partnerships and innovative technology, Teladoc stands out as a robust and undervalued healthcare stock pick.
Johnson & Johnson (JNJ)
Despite a 10% drop year to date, Johnson & Johnson (NYSE:JNJ) remains one of the best healthcare stocks to watch. It demonstrates resilience with a 6% increase in net income and an 8% rise in diluted EPS in the second quarter of 2023. Additionally, it completed a lung cancer trial for Rybrevant and revised its financial outlook following the Kenvue separation. As indicated by Needham, the company’s updated guidance and the MedTech market’s anticipated 7% growth in 2023 make Johnson & Johnson an undervalued healthcare stock worth considering.
Moreover, the company reported an annual dividend yield of 2.97%, which is good news for investors seeking regular income. With its recent positive updates and a growing MedTech market, Johnson & Johnson stands out among cheap healthcare stock picks. Despite the recent dip, its strong track record, robust dividend yield, and positive outlook for 2023 make it a compelling investment option.
Pfizer (PFE)
Pfizer (NYSE:PFE) has been a hot topic among the best healthcare stocks despite a rocky year-to-date return of -33%. Even though the recent earnings report showed a decline in revenue by 54.1% to $12.73 billion, net income dropped by 76.51% to $2.33 billion in July 2023. Despite these setbacks, the pharmaceutical giant remains an attractive proposition.
This is especially true as Pfizer and BioNTech recently received endorsement from the European Medicines Agency (EMA) panel for their updated COVID booster. They also received the EU nod for a new Omicron-adapted COVID shot.
These recent endorsements are significant in the context of a global pandemic. Moreover, an EPS beat of 15.28% in June 2023 indicates that Pfizer can still deliver positive surprises.
Investors looking for affordable healthcare investments might view the recent dip in Pfizer’s performance as intriguing. Despite the decrease in key financial metrics, Pfizer still plays a crucial role in the ongoing battle against COVID-19. In addition, it continues to be an essential addition to any dividend growth portfolio. Additionally, with the FDA reportedly set to clear updated COVID shots as early as Friday, significant upcoming catalysts can aid in the recovery of the stock. While the floor of this decline remains uncertain, Pfizer represents a doubling-down buying opportunity for investors aiming for long-term gains.
As the world grapples with virus variants, Pfizer’s role in global health remains more critical than ever. This makes it a compelling option among cheap healthcare stock picks.
On the publication date, Faizan Farooque did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.