Healthcare stocks have always been considered a safe haven in the midst of a bear market. Because no matter how bad things get, you will still spend money keeping up your health. But also, unfortunately, times of crisis leads to increased stress…which leads to more illness that requires medical attention.
Adding it altogether you understand why a focus on healthcare stocks make a lot of sense at this time while we are in the midst of this Coronavirus crisis. Yet not every healthcare stock is equally attractive. So I put together this list of 3 essential healthcare stocks that investors should focus on now: CVS Health Corp (CVS), Catalyst Pharmaceuticals (CPRX), and Moderna (MRNA).
Here is why…
CVS is the largest chain of pharmacies in the United States in terms of total prescription revenue and the number of locations. That certainly is an “essential” service at this time keeping CVS stores open while so many other retailers have to close their doors til things blow over.
Then with the company’s 2018 acquisition of Aetna, CVS can add health insurer to its list of consumer services. The company’s revenues rose 23% year-over-year which exceeded expectations which helps them pump up their impressive dividend yield payment of 3.4%.
Beyond this time with the Coronavirus, CVS is moving into more diverse offerings like holistic health and providing health insurance. This is a big part of the CVS growth story ahead that has so many analysts labeling the stock a Buy. That includes yesterdays reiterated Buy on CVS with appealing $82 target price from top rated analyst, Michael Cherny of Merrill Lynch.
Catalyst Pharmaceuticals (CPRX)
CPRX is a very interesting story. That’s because most companies this small (only $400 million market cap) don’t garner this much investor attention. For example, CPRX is on both the Robinhood brokerage list of “100 Most Popular Stocks” and “Most Popular Under $25.”
Well the appeal of CPRX is that it is a biopharmaceutical company that develops and commercializes therapies for people with chronic and rare neurological and neuromuscular diseases. The growth trajectory for CPRX is nearly 40% annually according to analysts. This certainly has a lot to do with shares actually being in the plus column this year after rising nearly 100% last year.
Yes, CPRX is the riskier selection in this article. But there is a lot of positive buzz around this stock that still points to more upside ahead…even in the midst of this Coronavirus scare.
MRNA is focused on medicines that harness the power of messenger ribonucleic acid (mRNA), Moderna strives to transform the healthcare landscape with cancer vaccines, localized regenerative therapeutics, intratumoral immuno-oncology and more.
MRNA experienced annual growth of nearly 38%. But that doesn’t fully explain the 49% gain for shares this year because most growth stocks have been taken to the cleaners. As I dig in on the MRNA research, they have a lot of promising drugs and therapies in the pipeline. Many of which are in partnership with other leading pharmaceutical companies.
Alan Carr from Needham is a healthcare analyst with great insight into MRNA and their peers. And yet even in the midst of this health crisis and bear market, he still felt confident reasserting his Buy rating on MRNA with $35 price target.
Healthcare stocks are always a good idea in the midst of a bear market. But do consider the unique appeal of these 3 stocks when making your final portfolio selections.
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CVS shares were trading at $58.34 per share on Friday morning, up $0.03 (+0.05%). Year-to-date, CVS has declined -20.94%, versus a -20.70% rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...
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