Best Healthcare Stocks for 2024: Investing in Healthcare

Review and Analysis

Overview

The health care industry, and the products and services it encompasses, are used by millions of people daily, as we all get sick and need to see a doctor, buy medicine, or be rushed to the hospital by an ambulance. As quality healthcare products and services are an absolute necessity for all humans, the healthcare market is massive in size, volume, and value, growing rapidly and expected to be worth more than $10 trillion annually by the year 2022.

The sheer size of the market means that companies in this sector have plenty of room for making huge profits and return those to their investors, thus the healthcare stocks sector is very attractive to investors seeking to invest in stocks.

To help you discern if a healthcare stock investment is the right one for you, let us discuss what this industry is and what are the pros, cons, and prospects of investing in it.

What Are Health Care Stocks?

The health care sector is admittedly an extremely broad and diverse one, and thus health care stocks represent companies across several different fields of activity, chief amongst which are:

Biotechnology

The entire spectrum of companies active in the biotechnology and pharmaceutical sector are included under the health care stocks group. To put it more simply, all companies that create, manufacture and market all the different kinds of medicines that people take whenever they are sick are health care companies.

Services

Many stocks of companies in the broad services sector, also fall within the spectrum of the health care sector stocks. This range from companies providing healthcare services per se, as well as other auxiliary health-related services, to health insurance companies.

Technology

A great number of technology companies stocks also come under the health care category, as technology is nowadays an integral part of healthcare services and their provision. Such technologies range from tools that make remote appointments with doctors possible to applications and software that are health-related, as well as many imaging and other technologies used in the diagnosis and treatment of medical conditions. In fact, most big tech companies are making sizeable investments into health care, with Apple and Amazon being prime examples of this trend.

Since all companies selling a product or service that is directly or indirectly related to maintaining people’s health is considered a health care company, then Apple counts as one due to the health monitoring features on its watches, as much as Pfizer does for producing dozens of medicines and vaccines.

By the end of the guide, you should know the following:

• If Healthcare stocks is a good or a bad investment.
• How to buy Healthcare stocks.
• Where to buy Healthcare stocks.
• Which Healthcare share is best to buy now?.
• Healthcare stock price prediction: Where Will Healthcare stock Be in the next few Years?

Pros and Cons of Buying Healthcare stock investment

Healthcare Pros and Cons

Benefits	Risks
There’s a Wide Range of Opportunities	Exclusivity Doesn’t Last Forever
Health Care Stocks Are Interesting	Clinical Trials Can Go Wrong
There’s a Feel-Good Effect	There Are Several Risky Plays That Look Good

The Benefits of Healthcare stocks investment

A huge sector in size and holds great potential for growth and profits, like any investment type, investing in the healthcare sector comes with its own benefits and drawbacks. Let us explore them further:

Investments in health care stocks, a sector that is huge as it is diverse, have many benefits that attract hordes of investors, both pros and novices. The most important strongpoints that potential investors should be aware of are:

• The Wide Range of Opportunities Available

  The big size and diversity of the health care market offer investors a wide range of opportunities to invest in stocks of health care companies with different market caps and at various risk levels. What this means is that whatever your individual investing goals and investment need, you are bound to find stocks within the healthcare sector that match your wants and deserve a place in your portfolio.

  To illustrate further how this is true if you are risk-averse and are looking for an investment with a long history of stable growth and solid dividend yields, you can choose a blue-chip stock in the healthcare sector, such as for example the Johnson & Johnson stock. However, if you don’t mind assuming a higher risk in the hope of more potential gains, the healthcare stock is also full of companies with a shorter past but great potential for a bright future, such as companies working on the development of newer medical treatments and vaccines.

• Healthcare is both relevant and interesting

  One of the core keys to successful investment endeavors is investing in companies whose activities you can understand, relate to, and find interesting. If this is not the case, you are unlikely to perform the necessary due diligence and make the effort to research, learn and understand what the company does and whether investing in it will mean profits for you too.

  Poor due diligence, research, and interest on behalf of the investor is the perfect recipe for disaster and usually leads to unwise and uneducated investment decisions. Health care and medicine have the merit of being topics that are important for our wellbeing and thus relevant for every one of us. Chances are then, that you will find researching into a healthcare sector stock much more interesting and exciting than researching stocks of companies in other, more mundane, sectors.

• It makes you feel good

  Since improving the lives of people is at the core of the efforts of all healthcare companies, investing in such companies inevitably gives investors an inherent feel-good effect. As the recent pandemic has turned pharmaceutical companies’ scientists and all healthcare sector providers into modern-day heroes, it is not strange for investors in the healthcare sector to view this move as philanthropic as much as a financial investing one.

  Investing in a healthcare company and helping effectively address and resolve healthcare problems faced by people across the globe bears a significant social responsibility aspect as well and makes investors feel good for doing something commendable and not just trying to make money.

  Things we didn't like in Healthcare stocks investment

  Despite the great lucrative potential and the inherent feel-good factor associated with investing in healthcare stocks, such an investment also comes with certain drawbacks which you should be aware of before deciding to invest in such stocks. The main downsides are as follows:

  • Exclusivity is not perennial

    Companies creating new medicines and new medical technology enjoy an exclusivity period, which is usually set to five years, after their product is approved by the pertinent authorities, in the case of the USA by the Food and Drug Administration (FDA). During this period, the company gains the right to be the only one selling the particular drug or treatment in the country.

    However, after this exclusivity period ends, then any other company may develop and market the same drug or therapy and sell it under a generic brand. Generic brands are cheaper and thus preferred by patients, thus seriously undermining and affecting the income and profits of the original drug manufacturer.

    The fact that exclusivity only lasts a few years, means that companies in the healthcare sector must constantly try to innovate and keep coming up with new treatments and medicines, as a failure to do so will leave them vulnerable to generic competition and greatly affect their earnings, even leading them to losses.

  • Not all Clinical Trials Succeed

    An additional risk faced by many companies in the healthcare sector that healthcare stock investors must be aware of is the issue of clinical trials. Before gaining permission to be marketed to the public, every drug or medical device must be tested in clinical trials to prove its safety and efficacy. Such clinical trials come in three separate phases and only medical products which successfully complete all three can start to be sold officially on the market.

    If at any point of the clinical trials something goes wrong and the outcome is unsuccessful, this may result in huge losses and a big decline in value for the stock of the healthcare company involved and it, therefore, must be taken into consideration when an investor is thinking of buying into a company with many products in the clinical-development stage.

  • Dreams and hopes often may remain just that

    As most healthcare companies are trying to make life better and often longer, many tend to sell to investors many high hopes and dreams, often claiming that they are on to something big and the next best cure for a serious health issue that affects the lives of people across the globe. Buying into hopes and dreams alone, however, irrespective of how noble and desirable their hoped outcome might be, is not such a good idea, as it entails many risks.

    Besides the risk of things going wrong at any stage during the development or the clinical trial stages for each new drug, the entire FDA approval process is often too long and too costly and this is not true only for companies developing new drugs, but also for companies putting forward new medical devices and technologies as well.

    Rather than buying into plans, hopes, and dreams, therefore, investors should instead perform a thorough search and due diligence and be sure they know accurately at which stage the company they are considering to invest in stands and to which risks it is exposed.

    Where Can You Buy Healthcare stocks

    There are several online sites and platforms where people from across the globe can buy Healthcare at good exchange rates and with low or no transaction fees. To aid your quest we have comprised a list of some of the most popular Stock Trading platforms to buy Healthcare sector's shares from and your strongly advised to consult this list before making your first purchase of or investment in Healthcare industry.

    Features to Look in Healthcare stocks

    

    Due to its big size and great diversity, the healthcare sector is full of investment opportunities of different types, and thus perhaps the most important factor to keep in mind is not deciding whether you should invest in healthcare, but rather when to invest and more specifically which types of healthcare sector stocks to choose under the overall economic conditions at the time of making the investment.

    If you choose to invest in healthcare during positive economic times when economies are booming and market prices are rallying, then you should seek healthcare stocks that are cyclical, as positive economic conditions favor this type of stock. Companies that develop and market healthcare technologies, including healthcare software and hardware, are prime examples of a predominantly cyclical stock, as consumers spend more on such solutions at times of economic prosperity. A characteristic example of such a stock is the Apple stock, which besides being a giant in the technology sector, has also developed an extensive healthcare branch dealing with healthcare-related technologies and applications. Thus, investing in Apple or any other similar company of a cyclical nature at a time of economic growth, grants you both exposure to the healthcare and technology sectors, as well as being a wise and fairly safe option to take.

    On the other hand, the truth is that the vast majority of stocks in the healthcare sector are non-cyclical stocks, simply because despite their own or the overall economic conditions, people will always be ready to spend on medicine and healthcare provision if their own health or the health of their loved ones is at risk. This makes such stocks ideal to get into at times of economic decline, when markets and economies are crashing, as such stocks hold the potential to record significant gains during hard times, making them a safe haven and a great addition to your investment portfolio. Examples of such stable-growth stocks include those of established pharmaceutical and health insurance companies.

    Future Outlook for Healthcare stocks

    

    Is now the right time to invest in Healthcare stocks?

    The answer is definitely not no, but a little short than a resounding yes. The industry’s outlook is promising and its future appears bright, however, investors should not be expecting a linear growth pattern, nor anticipate that all Healthcare stocks will fare equally well. To maximize the chances for success of your Healthcare sector stocks investment make sure you make smart and wise decisions on which energy companies you will choose to invest in.

    Risks of Investing in Healthcare stocks

    Tips on How to Invest in Healthcare stocks and Make a Profit

    There is no guarantee that you will make a profit when you invest in Healthcare. However, to give yourself the best chance possible we have hand-picked the three most valuable such strategies, which you can find below:

    • Tip 1: Set your own specific Financial Goals
    • Tip 2: Dollar-Cost Average Your Healthcare Investments
    • Tip 3: Diversify Your Healthcare Investment

    Overall Conclusion – Final Thoughts

    The health care sector is an industry that is huge, diverse, and ever-growing and thus holding innumerable opportunities to be had by investors. Besides their great earning potential, investing in healthcare stocks comes with the added satisfaction of investing in companies that aim to help improve or even save the lives of people across the globe.

    This being said, due to its massive size and incredible diversity, any investment in the healthcare sector requires careful and extensive research as well as rigorous due diligence, not least because of its many inherent risks and the highly regulated environment that healthcare companies are called to operate in.

    However, if you are prepared to do the research and can time your investments wisely, then the potential rewards of an investment in healthcare stocks may well be highly lucrative and rewarding.

    In this guide, the aim wasn’t only to answer simple questions like “how to buy stocks of the Healthcare sector?” or “where to buy Healthcare stocks?”. Instead, the goal was to equip you with the relevant knowledge and insight to be able to see and understand the bigger picture as well as make your Healthcare stocks investment journey as successful and as profitable as possible!