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Best health care stocks April 2024

Matt Neill

Verified By
Farran Powell
Farran Powell

Farran Powell

Verified by an expert

“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.

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Updated 12:34 p.m. UTC April 26, 2024

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The health care sector presents a unique blend of stability and growth potential for investors. Health care services and products are always in demand, which can help shield the industry from the more extreme fluctuations experienced by other sectors.

When evaluating the best health care stocks to invest in, it’s important to consider various factors, such as the company’s product pipeline, market share, revenue growth and profitability.

We screened our selection of the best health care stocks for 2024 based on several factors: a Wall Street “buy” consensus, market capitalization and risk level, factoring in accounting anomalies.

*Market data cited is as of March 28. 

Best health care stocks

UnitedHealth (UNH)

Market cap

YTD return

What you should know

UnitedHealth is the largest U.S. health insurer. The company provides health insurance via its UnitedHealthcare business, and it also serves as a pharmacy benefit manager via its OptumRx business, a health care provider via its Optum Health segment and a health analytics firm via its OptumInsight subsidiary.

UnitedHealth is one of the biggest blue-chip health care companies, reporting 13% year-over-year revenue growth and $26.2 billion in cash flows from operations in 2022. The health care sector is considered a defensive market sector, meaning you can sleep easy at night knowing demand and earnings are relatively insulated from economic downturns.

 

Pros and cons

Pros
  • A leading U.S. provider of Medicare Advantage plans, which should see growing demand as the population ages.
  • A solid balance sheet provides financial flexibility.
  • The $13 billion acquisition of Change Healthcare should boost Optum’s software, data analytics and technology-based service offerings.
Cons
  • COVID-19 variants or other unforeseen outbreaks create risk for health insurers.
  • Health insurance and pharmacy benefit businesses have been targeted by regulators.
  • UnitedHealth may not be able to maintain its double-digit revenue long term.

More details

 

GSK (GSK)

Market cap

YTD performance

What you should know

GSK, formerly known as GlaxoSmithKline, continues to distinguish itself through its vast array of medicines, vaccines and consumer health care products.

This globally recognized pharmaceutical company has a significant foothold in respiratory, HIV and immuno-inflammation markets. And to its credit, this confirms its strength and credibility within the health care sector. We’re especially impressed by the company’s unwavering commitment to research and development, further complemented by its consistent record of successful product launches.

In an industry known for its fierce competition, GSK has continuously displayed a spirit of innovation, allowing it to maintain a robust market presence in key health care segments.

This commitment to persistent innovation and growth strengthens GSK as a prime candidate for investment.

Pros and cons

Pros
  • Diversified product portfolio across pharmaceuticals, vaccines and consumer health care.
  • Steady dividend payer with a 3.50% yield.
  • Focus on R&D and strategic partnerships to drive growth.
Cons
  • Slow revenue growth in recent years.
  • Patent expirations could impact revenues.
  • Potential pressure from generic drug competition.

More details

Sanofi SA (SNY)

Market cap

YTD performance

What you should know

Sanofi specializes in prescription medicines, vaccines and consumer health care products, focusing on areas such as cardiovascular disease, diabetes and rare diseases.

The French multinational pharmaceutical company’s total gross profit soared 17.7% year over year in 2022. Its Specialty Care division delivered the highest sales among all its businesses in 2022. Dupixent, a medication used for allergic diseases, drove most of the strong performance in the Speciality Care division. Dupixent was approved in Europe in the fourth quarter for the skin condition prurigo nodularis.

For 2024, Sanofi is planning to hit 13 billion euros in sales for Dupixent, helping guide the stock to low-single-digit earnings-per-share growth.

Pros and cons

Pros
  • Diversified product portfolio and robust pipeline.
  • Large global presence and market share in various therapeutic areas.
  • Focused on innovation and research and development to maintain competitive advantage.
Cons
  • Some products face generic competition, impacting future revenue growth.
  • There’s always the downside of regulatory risks for drug approvals.
  • Currency fluctuations may affect earnings.

More details

Bristol-Myers Squibb (BMY)

Market cap

YTD performance

What you should know

Bristol-Myers Squibb is a global biopharmaceutical company that specializes in oncology, immunology and cardiovascular therapeutics. The company’s top-selling drugs of 2022 include cancer therapies Revlimid and Opdivo and anticoagulant Eliquis.

Bristol-Myers’ fourth-quarter earnings per share beat Wall Street expectations, but revenue dropped by around 5% year over year (YoY). The company said foreign exchange headwinds and generic competition for Revlimid were largely to blame for the revenue decline. But sales of Orencia were up 6% and Opdivo revenue grew 11% YoY, excluding forex impacts. The company’s new products portfolio also generated $645 million in revenue for the quarter.

 

Pros and cons

Pros
  • Forward earnings multiple of around 8 suggests an extremely attractive valuation.
  • Appealing 4.91% dividend yield.
  • Late-stage drug pipeline focuses largely on cancer and immunology, which typically generate strong pricing power.
Cons
  • Leading cancer drug Revlimid faces significant generic competition.
  • Heavily relies on Opdivo for growth, creating risks associated with competing drugs and clinical data.
  • More than $35 billion in long-term debt.

More details

Roche Holding AG (RHHBY)

Market cap

YTD performance

What you should know

Roche’s comprehensive and successful approach to health care, emphasizing disease treatment and early detection, underscores its standing as a leading pick in our selection of top health care stocks.

The Swiss health care powerhouse consistently displays robust performance through its dual divisions: pharmaceuticals and diagnostics. Roche’s commanding presence in oncology, immunology and infectious diseases offers a diversified revenue stream, enhancing its investment proposition.

The lowered demand for COVID-19 tests did cause group sales to slump in the first quarter. But aside from the COVID-19-related business, the pharmaceutical division sales grew 9%, with CHF 11 billion in sales, thanks to its drug portfolio. Roche’s diagnostic division grew by 4%.

The company is guiding toward single-digit growth among its base businesses.

Pros and cons

Pros
  • A diversified business model with pharmaceutical and diagnostic divisions.
  • Solid product portfolio and pipeline with a focus on innovation.
  • Strong market position in oncology and immunology.
Cons
  • Exposure to pricing pressures and generic competition.
  • Patent expirations may impact revenues.
  • Regulatory risks and challenges in drug approvals.

More details

Compare the best health care companies

Methodology

The best health care stocks included above all trade on a major U.S. stock exchange and meet the following criteria:

  • Consensus analyst recommendation of “buy” or better. A high number of analyst “buy” ratings indicates an expectation that the stock will outperform the overall market.
  • Market capitalization of at least $10 billion. If a company has a leading market share and competitive advantages in a sizable industry, it will have a market cap greater than $10 billion. This is particularly true of many stocks related to the health care industry, which have significant capital requirements and long-term goals.
  • An Altimeter overall grade of at least a B. We applied a screen to select the best stocks for this list, considering only stocks rated a B or better by Altimeter. The overall grade considers profitability, earning stability, valuation and earning expectations. Grades of B or higher for both are stocks that are ranked in the top quarter of nearly 5,000 stocks in Altimeter’s stock database. This indicates that these companies have strong valuations with the ability to improve returns.
  • An Altimeter fundamental forensics grade of at least a B. We applied this screen to select the best stocks for this list, considering only stocks rated a B or better based on a forensic accounting score. This grade considers whether the company signals any major flags; a good score indicates a lower risk for accounting anomalies.

Why other stocks didn’t make the cut

The investment landscape, particularly within the realm of health care, is replete with opportunities that may, at first glance, seem lucrative. Yet a measured approach is paramount when selecting stocks, so we have not included smaller companies in our list.

Despite their potential for innovation and disruption, these emerging companies frequently carry heightened risks for investors. Their vulnerability to market fluctuations, their less established track records, and the often unproven nature of their technologies or therapies can lead to unpredictability in their stock performance.

The process of drug development they are engaged in is an arduous journey filled with regulatory hurdles and scientific challenges. This inherent risk factor is exacerbated in the case of smaller firms, which may lack the necessary resources to withstand failure in clinical trials or unexpected roadblocks in the path to commercialization. As a result, while potentially offering high rewards, these smaller companies equally possess high-risk attributes, making them unsuitable for those seeking long-term, consistent returns.

Final verdict

Health care is an essential and ever-evolving sector, playing a pivotal role in shaping the overall well-being of individuals and communities across the globe.

Rapid advancements in medical technology, a growing aging population and an increased focus on personalized medicine have created significant opportunities for investors. As such, investing in the best health care stocks can be a smart strategy for diversifying your portfolio and capitalizing on the expanding market.

As the world continues to grapple with new and existing health challenges, investing in the best health care stocks can provide both financial rewards and the satisfaction of contributing to improving global health.

Our extensive analysis of the health care sector leads us to GSK as a strong health care stock to consider.

GSK a renowned global pharmaceutical company, offers an impressive portfolio. GSK's strong position in respiratory, HIV and immuno-inflammation markets, combined with its consistent track record of innovative and successful product launches, illustrates its ability to maintain a robust presence in the sector amid intense competition.

When considering an investment in health care, GSK stands out as a prime choice for diversifying your portfolio and capitalizing on this expanding market.

If you have different financial goals or are looking for other types of stocks, here are some suggested lists to review and consider:

Frequently asked questions (FAQs)

Health care stocks can be a good long-term investment due to the sector’s stability, continuous demand for services, and the potential for growth through innovation and new treatment breakthroughs. 

With an aging global population and increasing prevalence of chronic diseases, the demand for health care services is expected to rise, providing a solid foundation for long-term growth in the sector.

Health care stocks are generally considered defensive investments, as the demand for health care services and products tends to remain relatively stable even during economic downturns, making them more resilient in a recession. 

But it’s essential to remember that not all health care stocks perform equally well during tough economic times. For instance, crucial medical services or pharmaceutical stocks may fare better than those in elective or cosmetic procedures.

 

Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.

Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.

Matt Neill

BLUEPRINT

A London-based financial journalist and writer with experience covering markets ranging from bonds to insurance, cryptocurrencies and ETFs, to emerging markets and the energy industry.

Farran Powell

BLUEPRINT

Farran Powell is the lead editor of investing at USA TODAY Blueprint. She was previously the assistant managing editor of investing at U.S. News and World Report. Her work has appeared in numerous publications including TheStreet, Mansion Global, CNN, CNN Money, DNAInfo, Yahoo! Finance, MSN Money and the New York Daily News. She holds a BSc from the London School of Economics and an MA from the University of Texas at Austin. You can follow her on Twitter at @farranpowell.

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