3 Can't-Miss Health Care Stocks for 2022
When you start scanning health care stocks, some common themes emerge: strong balance sheets and cash for mergers and acquisitions, not to mention dividends to line your pockets.
There's a long list of reasons to consider health care stocks, and they don't all relate to the coronavirus vaccine, as you might assume.
Why invest in health care stocks? Easy.
According to the Commonwealth Fund, the U.S. spends more on health care as a share of the economy than any other country — nearly twice as much as the average OECD country. Americans use expensive technologies such as MRIs and specialized procedures (like hip replacements) more than other countries. The Commonwealth Fund also states that the U.S. has one of the highest rates of breast cancer screening among women ages 50 to 69 and the second-highest rate of flu vaccinations among people aged 65 and older.
When you start scanning health care stocks, some common themes emerge: strong balance sheets and cash for mergers and acquisitions, not to mention dividends to line your pockets. Paving the way for a natural nod to health care stocks includes an aging global population, a high demand for elective procedures, drug sales, medical equipment and diagnostic tests.
Sure, big tech and cryptocurrency might catch your eye, but why not invest in health care in 2022?
3 Health Care Stocks to Add to Your Portfolio in 2022
Health care stocks can add a robustness to your portfolio that's unlike any other sector you can invest in. Take advantage of the unique opportunities that health care can bring to a well-balanced portfolio. Take a look at our three health care picks to add to your portfolio in 2022.
Eli Lilly and Company (NYSE: LLY)
Eli Lilly and Company (NYSE: LLY), headquartered in Indianapolis, Indiana, operates on a eye-popping scale — the company has a mammoth operation, with more than 34,000 employees worldwide, around 8,000 employees engaged in research and development, clinical research in 55 countries, research and development (R&D) facilities and manufacturing plants located in seven countries and products marketed in 120 countries.
Its and wide range of treatable conditions and familiar current medicines include the following:
- Cardiovascular treatment: ADCIRCA
- Neurodegeneration treatment: AMYViD
- COVID-19 treatment: bamlanivimab and etesevimab, baricitinib
- Diabetes treatment: BAQSIMI, BASAGLAR, Glucagon Glyxambi, Humalog, Humulin, Insulin Lispro, Jardiance, Jentadueto, Lyumjev, Synjardy, Tradjenta, Trijardy, Trulicity
- Cancer: CYRAMZA, ERBITUX, ALIMTA, Gemzar, Portrazza, Retevmo, Verzenio Cancer
- Bone, muscle, joint treatment: FORTEO
- Endocrine treatment: Humatrope
- Immunology: Olumiant, Taltz
- Pain: EMGALITY, REYVOW
- Neuro treatment: Zyprexa Relprevv
Lilly and Company's revenue increased to $6.773 billion from $5.74 billion in the third quarter of 2021. Revenue grew 11% in both third-quarter and year-to-date in 2021. Products contributed to that growth, including Trulicity, Taltz, Verzenio and Emgality.
In more exciting announcements, Lilly submitted tirzepatide in type 2 diabetes and a rolling submission for donanemab to the FDA for accelerated approval in early Alzheimer's disease.
It also received U.S. approvals for new indications for both Verzenio and Jardiance, submission of Jardiance in the U.S. and Europe for heart failure with preserved ejection fraction (HFpEF), and positive Phase 3 readouts for lebrikizumab in atopic dermatitis.
UnitedHealth Group Inc. (NYSE: UNH)
UnitedHealth Group Inc. (NYSE: UNH), a health care company, has four segments under two business platforms, health benefits and health services. The four segments include UnitedHealthcare, OptumHealth, OptumInsight, and OptumRx.
- UnitedHealthcare: Provides health care under the following: UnitedHealthcare Employer & Individual, UnitedHealthcare Medicare & Retirement, UnitedHealthcare Community & State and UnitedHealthcare Global businesses.
- Optum: Serves payers, care providers, employers, governments, life sciences companies, and consumers through OptumHealth (care delivery, management, wellness and more), OptumInsight (data, analytics, research, etc.), and OptumRx (pharmacy care services).
UnitedHealth's revenue increased 11% last year, and the revenue growth pushed forth a 20% increase in operating profit and strong cash flow. UNH stock has outperformed the general market at 90% compared to the S&P 500 rise of 68% since 2017. Its premium generation, fees for medical and consulting services and sales of medical products and services paves the way for an upside 2022 investment option.
Centene Corp. (NYSE: CNC)
In our investigation of low-priced health care stocks poised for a climb, Centene Corporation (NYSE: CNC), headquartered in St. Louis, Missouri, caught our attention. As of this writing, Centene's stock price was $76.78.
A multinational healthcare enterprise that provides programs and services to under-insured and uninsured individuals in the United States, Centene offers health plan coverage to individuals through government-subsidized programs and through its primary and specialty care physicians, hospitals and ancillary providers. Its health service plans include the following (large) array:
- Primary and specialty physician care
- Inpatient and outpatient hospital care
- Emergency and urgent care
- Prenatal care
- Laboratory and X-rays
- Home-based primary care
- Vision and dental care
- Therapy and social work
- Care coordination services
The company also provides over-the-counter drugs, medical equipment and abuse/behavioral health services. It also offers a nurse advice line and after-hours support services and services to those eligible for the Military Health System.
The financial health and growth prospects of Centene Corp. demonstrate its potential to outperform the market, including a 2022 revenue outlook that went over and above expectations. The company is evaluating strategic alternatives for its international business and expects 2022 revenue of $135.9 billion to $137.9 billion. The stock has shot up over 25% as health care ETFs lag. It reported total revenues of $32.4 billion for the third quarter of 2021, representing 11% growth compared to the third quarter of 2020. The company also reported a $0.99 diluted EPS for the third quarter of 2021, compared to $0.97 for the third quarter of 2020.
Dip into Health Care for Added Pluses
While health care stocks don't dominate the market like big tech and cryptocurrencies, major health care companies continue to strive to preserve the basics — quality of life for all human beings. After all, we can't live without vaccines, cancer drugs, mental health drugs and cardiovascular advances. If you think of health care stocks as an afterthought to your portfolio, think again. They can be a huge boon (all those developing technologies) to your portfolio in the new year.
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