Investing in the healthcare sector has become more popular since the Covid-19 pandemic arrived. With global health an essential item on every political agenda, it’s obvious why.
Healthcare can be a lucrative investment area, but it’s also a challenging sector to invest in. It’s burdened with regulatory scrutiny and long periods of research and development.
With an altruistic desire to help people, it can be easy to fall for a promising-sounding healthcare stock bringing hope. Unfortunately, the healthcare sector is rife with speculative ventures, and it pays to be diligent.
Key industry players in the US healthcare sector include:
CVS Health Corporation (NYSE: CVS)
UnitedHealth Group Incorporated (NYSE: UNH)
McKesson Corporation (NYSE: MCK)
AmerisourceBergen Corporation (NYSE: ABC)
Anthem, Inc. (NYSE: ANTM)
Centene Corporation (NYSE: CNC)
Johnson & Johnson (NYSE: JNJ)
Q4 Healthcare momentum stocks
Momentum refers to the speed or rate of change in stock price. Healthy price trends tend to exhibit strong momentum and price weakens when momentum subsides. The following stocks have been enjoying a rise in momentum in recent weeks. Can their streak continue in Q4?
InMode (NASDAQ: INMD)
InMode designs, develops, manufactures, and markets minimally-invasive aesthetic medical products. Procedures its products are used in include liposuction with simultaneous skin tightening, body and face contouring, and ablative skin rejuvenation plus permanent hair reduction, skin rejuvenation, wrinkle reduction, cellulite treatment, skin tightening, fat reduction, and muscle stimulation.
Its target market includes plastic and aesthetic surgeons and dermatologists.
InMode has a price to earnings ratio (P/E) of 49, and INMD stock appears in 26 ETFs, but it doesn’t offer a dividend.
Inmode’s sales growth for its latest interim period vs. the prior period is 183.8%. Meanwhile, its three-year CAGR for Sales is 56%, and analysts’ 12-Month average share price target is $139, which is 6% below its current price.
Acadia Healthcare Inc (NASDAQ: ACHC)
ACADIA Pharmaceuticals is a biopharmaceutical company commercializing drugs for central nervous system disorders. This includes treatments for acute and chronic pain, hallucinations, and delusions associated with Parkinson’s disease psychosis, among other conditions.
It has a P/E of 35, and it doesn’t offer a dividend. The ACHC share price is up 130% in a year and 30% in the past five years. ACHC stock is held in 103 ETFs.
Analysts 12-Month average share price target is $75.07. This is 16% above its current share price.
Knight Therapeutics Inc (TSX: GUD)
Knight Therapeutics is a Canadian specialty pharmaceutical company. It develops solutions for various conditions, including menopausal and postmenopausal problems, IBS, prostate cancer, and endometriosis pain, among others.
It has a P/E of 12, and it doesn’t offer a dividend. GUD stock is held in 3 ETFs.
Analysts 12-Month average share price target is $7.72. This is 41% above its current share price.
Q4 Healthcare growth stocks
Growth in sales and/or earnings per share indicates a business that is growing. Growth stocks can make very lucrative investments when the share price rises in time with the business expansion. But growth stocks are also risky as investment analysis is based on future price action rather than historical price performance.
Famous growth investors include Philip Fisher, T. Rowe Price, and Jim Slater.
DLH Holdings (NASDAQ: DLHC)
DLH provides healthcare and social services, including defense and veterans’ health solutions. It also offers public health and life sciences services, such as clinical trials, epidemiology studies, and disease prevention.
It has a P/E of 19, and it doesn’t offer a dividend. DLHC stock is held in 4 ETFs.
One analyst has given DLHC stock a buy rating with a potential 13% upside.
Syneos Health (NASDAQ: SYNH)
Syneos Health provides biopharmaceutical outsourcing solutions. Its Clinical Solutions division services clinical development Phases I to IV. At the same time, its Commercial Solutions segment offers commercialization services, including PR and consulting services. Syneos Health has a partnership with VBI Vaccines for the commercialization of a hepatitis B vaccine.
The company has a three-year compound annual growth rate (CAGR) of EPS is over 46%. At the same time, sales growth has been increasing at 18% CAGR.
The SYNH share price has risen 69% in a year and 101% in 5 years. Syneos stock also appears in 107 ETFs, and it has a P/E of 40. The analyst’s 12-Month average share price target is $98, which gives 9% potential upside.
ModivCare (NASDAQ: MODV)
ModivCare is a technology-enabled healthcare services company. It recently acquired VRI Intermediate Holdings, an industry-leading provider of remote patient monitoring solutions, for around $315m.
The MODV share price has risen 106% in a year and 280% in 5 years. ModivCare stock also appears in 93 ETFs, and it has a P/E of 41. The analyst’s 12-Month average share price target is $221, which gives close to 20% potential upside.
Q4 Healthcare value stocks
Value investing is a very popular type of stock market investing advocated by Billionaire investor Warren Buffett. When growth stocks are in favor, value stocks tend to be less popular and vice versa. Value stocks should be trading for less than their intrinsic or book value.
Organon & Co (NYSE: OGN)
Organon is a science-based pharmaceutical company developing a portfolio of prescription therapies within women’s health, biosimilars, and established brands. Its portfolio of brands also covers cardiovascular, respiratory, dermatology, and non-opioid pain management.
Organon was recently spun-off from Merck (NYSE: MRK), and therefore details of its financial history are sparse.
OGN stock is held in 139 ETFs, and it has a P/E of 5. The analyst’s 12-Month average share price target is $42, which gives it close to 28% potential upside.
Uniqure (NASDAQ: QURE)
Founded in 1998, uniQure is a gene therapy company treating hemophilia B, Huntington’s disease, and other rare diseases. It has collaboration and license agreements with Bristol Myers-Squibb, Gen-X, and Synpromics Limited.
QURE stock is held in 37 ETFs, and it has a P/E of 5. The analyst’s 12-Month average share price target is $66, which gives it 104% potential upside.
Ovid Therapeutics (NASDAQ: OVID)
Ovid Therapeutics is a biopharmaceutical company developing medicines for neurological disorders.
The company ended Q2 with cash and cash equivalents of $212.2 million. OVID’s newly appointed leadership team is actively pursuing business development opportunities.
OVID stock is held in 19 ETFs, and it has a P/E of 1.9. The analyst’s 12-Month average share price target is $4.75, which gives it 39% potential upside.
The stocks in this article were selected based on quantified analysis. This can give investors sector insight and a starting point from which to make investment decisions. This should not be construed as financial advice.