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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.

• Additionally, many companies in the space are heavily impacted by legislation, which can change and contribute to volatility.
• The company was founded in 1876 by Colonel Eli Lilly, who was a veteran of the Civil War.
• For example, researchers at the company developed one of the three FDA emergency authorized Covid-19 vaccines, the only single-shot option currently available.

We believe everyone should be able to make financial decisions with confidence. Pfizer’s top-selling pharmaceuticals are household names, including the antidepressant Zoloft, the erectile-dysfunction drug Viagra and the anti-anxiety drug Xanax. The company has also developed one of the leading Covid-19 vaccines, which it expects will defend against the new omicron variant of the disease. Indiana-based pharmaceutical firm Eli Lilly employs more than 34,000 employees across 18 countries and sells its products in 120 different countries. The company was founded in 1876 by Colonel Eli Lilly, who was a veteran of the Civil War. One of the first products it developed was quinine, a medication used to treat malaria.

best health care stocks by one-year performance

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 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.

Types of Healthcare Stocks

UnitedHealth Group (UNH -0.22%) ranks as the largest commercial health insurer in the U.S. It also operates one of the biggest PBMs and is a leader in healthcare delivery services. The company’s size, stability, and dividend make UnitedHealth Group one of the most attractive payer stocks on the market. UnitedHealth Group has also expanded its presence in the healthcare provider market with its 2023 acquisition of home health services provider LHC Group. Vertex Pharmaceuticals (VRTX +0.77%) stands out as one of the top biotech stocks on the market. The company primarily focuses on developing drugs that treat the underlying cause of cystic fibrosis (CF), a rare genetic disease that damages the lungs and other organs.

That might mean selling put options on health care stocks they want to buy, or selling covered calls on health care stocks they already own. Below is a list of nine of the best-performing health care stocks in the S&P 500, ordered by one-year performance. Our editors are committed to bringing you independent ratings and information.

Investing in Health Insurance Stocks

Our screen favors companies in the pharmaceuticals space that have experienced strong returns in the last month, occasionally due to the success of a popular drug or other product. But just as some of these firms may rise rapidly, they may also fall just as precipitously, particularly if a promising new product ends up not working as expected. Drugmakers and medical device makers can fail to secure the necessary regulatory approvals to market new products. Regulatory changes can drastically alter a healthcare stock’s growth prospects.

What is the most profitable healthcare company?

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.

Abbott is perhaps best known for some of its more innocuous consumables, such as PediaSure, Pedialyte and Similac. But, like other healthcare companies responding to the pandemic, it also has a Covid-19 test. UnitedHealth Group is the biggest publicly traded health insurance company in the U.S. by market capitalization. Through its network of companies, UnitedHealth offers numerous health insurance plans as well as owns Optum, which provides, among other things, healthcare benefits like health savings accounts (HSAs).

A key benefit health care provides to investors is consistent demand. Because individuals will always have medical needs to be met, the overall demand for health products and services typically remains at least constant and tends to increase over time as populations grow older. Nationwide health care expenditures are expected to surge to $6.8 trillion by the year 2030. Health care stocks are shares of publicly-traded companies that offer products and services in the medical industry. Health care stocks include things like hospitals and other medical properties, biotechnology companies, medical equipment companies and insurance companies. The health care sector is massive, complex, and rich with opportunities for investors willing to take the time to understand its ins and outs.

Headquartered in New York City, Pfizer is a pharmaceuticals giant that makes medicines, vaccines and some consumer healthcare products. Pfizer has operations in more than 50 countries around the world—in 2020, only about half of its revenue came from the United States. Like many other healthcare companies, Thermo Fisher has jumped into the Covid-19 business. The company already offers a test that it says can detect the new omicron variant, making it presently the only FDA-authorized test capable of detecting the variant. Many healthcare companies are also highly dependent on Medicare reimbursement levels.

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.

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 health care stocks 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.

• This focus on innovation may mean that health care stocks offer the potential for short- and long-term gains.
• And the conclusion of election season should dampen policy fears surrounding the sector.
• Others, such as Tenet Healthcare, are operators that hire and manage doctors, nurses and technicians to provide health care services to patients.
• Like many other companies on our list, Danaher’s operations are vast and diverse.
• 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.
• UnitedHealth Group has also expanded its presence in the healthcare provider market with its 2023 acquisition of home health services provider LHC Group.

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.

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.

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.

Alnylam has been a leader in RNA interference, a type of therapeutic treatment that can “silence” or turn off the production of specific genes that contribute to or cause a disease. The company focuses on treating rare diseases and those with unmet medical needs, such as transthyretin amyloid cardiomyopathy, a potentially fatal heart disease that occurs when faulty proteins build up in the heart. Meanwhile, argenx primarily develops antibody-based therapies for autoimmune diseases, including diseases that cause muscle weaknesses. The health care sector has long been considered a defensive sector, alongside utilities and consumer staples. But honestly, that designation might do health care stocks a disservice. Health care stocks often experience astronomical rallies during these moments.