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The company’s predecessor firm was founded by the Merck family in Germany, and the modern incarnation of Merck was actually started as an American affiliate of the German enterprise in 1891. Health insurance is a necessity today, which means it’s a great addition to your portfolio.

• One of the first products it developed was quinine, a medication used to treat malaria.
• For 2025 and beyond, I believe many health care industries may be well positioned.
• Headquartered in New York City, Pfizer is a pharmaceuticals giant that makes medicines, vaccines and some consumer healthcare products.
• National health spending is projected to grow at an average annual rate of 5.4% through 2028, reaching $6.2 trillion and 19.7% of the country’s GDP.
• But, like other healthcare companies responding to the pandemic, it also has a Covid-19 test.

Key Data Points

The sector also sports improving business fundamentals, like cash flows, and a vast and diverse number of industries with a combination of defensive and growth characteristics that may be attractive in a variety of scenarios. Moreover, I’ve been seeing a lot of green shoots in terms of novel, viable drug candidates in biotechnology, which gives me optimism about the growth prospects for this innovative sector. However, investors shouldn’t overlook health care’s downright persistent spending growth. The health care sector has outperformed during the dot-com bubble bust, the Great Financial Crisis, 2011’s sharp summer drop, 2018’s near-bear, the 2020 COVID plunge and the 2022 bear market.

• Interestingly, though, this outperformance comes amid an extremely weak few months for health care, prompted by uncertainty amid expected (and implemented) policy changes by the new presidential administration.
• With the healthcare sector growing significantly faster than the overall economy, the numbers will almost certainly be much larger by the end of the decade.
• This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research.
• But honestly, that designation might do health care stocks a disservice.
• Yes, pharmaceuticals, health care devices and medical coverage are among the last expenditures you’d cut if money were tight, and that fact gives the sector its defensive quality.

Insights from Fidelity Wealth Management

Healthcare stocks face these risks, as well as others that are more unique to the sector. The effects of government policy changes on health care stocks are more complex than you health care stocks might think, and history suggests that the sector is good at adapting to big reforms. The Health Care SPDR Select Sector Fund actually outperformed the S&P 500 in the decade after the Affordable Care Act was passed in 2010. Another way to get the benefit of investing in several health care stocks is through an exchange traded fund, or ETF — of which dozens are available. It might be tempting to invest in specific health care stocks — after all, many of the stocks listed above have quite well in recent years. NerdWallet, Inc. is an independent publisher and comparison service, not an investment advisor.

Over the long run, the company should have tremendous growth opportunities ahead with an aging population requiring the types of surgical procedures for which Da Vinci is frequently used. Biotech companies made a series of positive clinical announcements. And excitement around new obesity and diabetes treatments helped turn Eli Lilly () and Denmark’s Novo-Nordisk ()1 into 2 of the largest pharmaceutical firms on the planet, as measured by market capitalization. And policy uncertainty inherent in an election year likely weighed on the sector as a whole. But other investors love the potential growth offered by biotech and medical-technology names.

UnitedHealth Group

He has been featured by CNBC, Fox Business, Bloomberg, and MarketWatch. Waltham, Mass.-based Thermo Fisher Scientific Inc. manufactures scientific equipment, instruments and software used in medical research and development as well as reagents and consumables. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. The continued legalization of marijuana means growth for companies in this sector.

Fidelity Viewpoints®

The duality of health care stocks makes it really difficult for us to predict what you might want out of the sector. In short, while all health care companies have a common bond, the sectors’ businesses are actually quite diverse. The health care sector might seem pretty narrow and specific at first glance, but in a way, it’s actually one of the market’s most inclusive sectors. Some health care ETFs, such as the Health Care SPDR Select Sector Fund, are sector-wide ETFs — basically, health care index funds — that include companies from all of the industries discussed above. Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.

Half of that amount — around $4.9 trillion — is spent in the U.S. With the healthcare sector growing significantly faster than the overall economy, the numbers will almost certainly be much larger by the end of the decade. You can check out his thoughts on the markets (and more) at @KyleWoodley. S&P Global Market Intelligence converts analysts’ ratings into a numerical scale. Every stock that made the list has a score of 2.5 or less, though most of them have much lower scores than that, meaning they’re higher-conviction consensus Buys.

In this role, Mr. Yoon is responsible for the coverage of health care equipment and supplies stocks, and serves as the health care sector leader. The best health care stocks offer investors a defensive hedge in an uncertain market. To screen for the best health care stocks this month, we looked at firms listed on either the Nasdaq or the New York Stock Exchange.

The U.S. healthcare sector is growing faster than the rest of the economy. Growth in the sector is being propelled by technological advances, an aging population and improving treatments for chronic diseases and conditions. While Johnson & Johnson is often thought of for its consumer products, it actually makes far more than Q-tips and baby powder. For example, researchers at the company developed one of the three FDA emergency authorized Covid-19 vaccines, the only single-shot option currently available.

Vertex has also expanded beyond CF with gene-editing therapy Casgevy (a one-time treatment for the rare blood disorders sickle cell disease and transfusion-dependent beta-thalassemia) and acute pain therapy Journavx. Here’s what you need to know about investing in healthcare stocks. Anti-obesity drugs may have taken center stage in recent years, but recent dramatic breakthroughs in the biotechnology industry could be game changers in the coming years. Overall, biotech firms have been supported by a decrease in the cost of genome sequencing, the expansion of cell-based therapies, and an accelerated pace of drug discovery. Just this year, biotech firms have been reporting encouraging clinical data in blockbuster categories that could move the needle for industry sales.

Services

Instead, consider purchasing exchange-traded funds (ETFs) or index funds that track diversified indexes focused on the healthcare sector. These are less swayed by the individual ups and downs of any one company but provide solid, steady long-term growth. Retirement investors can buy healthcare stocks in tax-advantaged retirement plans, like individual retirement accounts (IRAs). But if you have a 401(k), you’ll likely instead have to look into mutual funds that focus on the healthcare industry, rather than individual stocks.

The first step to invest in health care stocks is to open a brokerage account. When you’re considering a new investment, in healthcare stocks or any other market sector, doing your due diligence is always the first step. While the large-cap stocks listed above can be very safe bets, more volatile small-cap biotech stocks can be incredibly risky investments. Some headwinds that held the stocks back in the past year may be poised to fade. For example, the unexpected acceleration in utilization is likely to eventually reverse. Any indication that we’ve reached the peak of utilization could be positive for the performance of managed-care providers.