The first two years of the 2020s has been all about COVID-19, and the pandemic has affected healthcare stocks in ways that will likely carry on for years to come.
By mid-November 2021, roughly 254 million coronavirus cases had been identified worldwide causing more than 5.1 million deaths. However, nearly 7.6 billion people around the world had received at least one dose of a COVID-19 vaccine, equating to 52.4% of the global population, according to research firm Our World in Data.
Given how the Delta variant of COVID-19, which is more than twice as contagious as the original virus, wreaked havoc in mid-2021, scientists are now worried that there will be more offshoots of the coronavirus that are even more transmissible.
As a result, new vaccines will continue to be developed to fight these new virus strains – keeping COVID-19 and vaccine news front and center in 2022 and putting some healthcare stocks in the driver’s seat when it comes to growth.
Here, we explore 13 of the best healthcare stocks to buy for 2022. Some of these picks are at the forefront of developing COVID-19 products and vaccines, while others have business models that are designed to do well in most market conditions.
Data is as of Nov. 17. Analysts’ ratings courtesy of S&P Global Market Intelligence. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.
UnitedHealth Group
- Market value: $422.8 billion
- Dividend yield: 1.3%
- Analysts’ ratings: 17 Strong Buy, 5 Buy, 3 Hold, 1 Sell, 0 Strong Sell
In October, UnitedHealth Group (UNH, $448.95) announced that it would launch NavigateNOW, a new health plan focused on virtual healthcare. It is available to select employers in nine U.S. markets, including Pittsburgh, Minneapolis and Houston. It will be 15% cheaper than traditional benefit plans while still providing in-person visits in addition to virtual care.
These efforts at expanded virtual care will likely help boost UnitedHealth’s top line, though it’s already seeing impressive growth. UNH’s most recent quarterly report included an 11% increase in revenues to $72.3 billion. Its UnitedHealthcare (healthcare benefits) and Optum (healthcare services) units both experienced year-over-year double-digit percentage sales growth during the quarter. UnitedHealthcare accounts for 58% of total revenues, with Optum generating the other 42%.
The insurance giant had adjusted earnings per share (EPS) of $4.52 during the third quarter, up 28.8% from the year earlier. It generated $7.6 billion in cash flow from operations, a healthy 180% of net income. UnitedHealth Group’s net margin in the quarter was 5.6%, 70 basis points (a basis point is one-one hundredth of a percentage point) higher than a year ago.
The health insurer’s medical care ratio (MCR) – the medical expenses paid out divided by total collected premiums – in the third quarter was 83.0%, 110 basis points less than a year ago. The lower the MCR ratio, the better.
UNH also paid out $1.4 billion in dividends to shareholders during the third quarter while buying back $1.1