The medical industry remains resilient due to perennial demand. Moreover, digital healthcare and wearable medical devices are transforming the healthcare sector by enabling healthcare providers to offer more affordable and remote healthcare services while also allowing to monitor patients’ vital signs and adjust treatment procedures in real-time.
Given this backdrop, I think quality medical stocks McKesson Corporation (MCK), Centene Corporation (CNC), Cardinal Health, Inc. (CAH), and Nature’s Sunshine Products, Inc. (NATR) might be ideal buys and could help make you a small fortune.
The aging population and rising chronic diseases have led to a continual demand for healthcare. As a result, there exists a consistent demand for medical services. Revenue in the healthcare industry is expected to grow at a CAGR of 12.9% until 2027, reaching $27.67 billion.
Moreover, the growth of digital healthcare with improved internet connectivity and remote healthcare services is expected to boost the industry significantly. Digital healthcare services enable healthcare providers to reach patients, especially those in remote or underserved areas.
It also allows the delivery of healthcare services more cost-effectively. The U.S. digital health market is projected to grow at a CAGR of 17.1% until 2030.
Furthermore, the Internet of Things (IoT) has facilitated the connection of regular items to the internet, resulting in the development of wearable healthcare devices. These gadgets allow healthcare providers to monitor vital signs and regulate treatment procedures in real-time. The global wearable medical device market is expected to expand at a CAGR of 28.1% until 2030.
Take a look at the stocks mentioned above:
McKesson Corporation (MCK)
MCK provides healthcare services in the United States and internationally. It operates through four segments: U.S. Pharmaceutical; International; Medical-Surgical Solutions; and Prescription Technology Solutions.
MCK’s forward EV/Sales of 0.19x is 94.8% lower than the industry average of 3.66x. Its forward Price/Sales multiple of 0.17 is 95.8% lower than the industry average of 4.08.
On January 26, 2023, MCK announced a quarterly dividend of $0.54 per share, payable on April 3, 2023.
MCK pays $2.16 annually as dividends. This translates to a yield of 0.63% at the current price, compared to the 4-year average dividend yield of 0.89%. Its dividend payments have grown at a CAGR of 8.9% over the past three years.
MCK’s revenues increased 2.7% year-over-year to $70.49 billion in the fiscal third quarter, which ended December 31, 2022. The company’s income from continuing operations improved significantly year-over-year to $1.12 billion.
Moreover, its adjusted earnings increased 3% from the prior-year quarter to $972 million, while its adjusted EPS came in at $6.90, representing an increase of 12.2% year-over-year.
Analysts expect MCK’s revenue for the current quarter ending March 2023 to increase 3% year-over-year to $68.08 billion. The company’s EPS for the same quarter is expected to increase 21.9% year-over-year to $7.11. Additionally, it has topped consensus revenue estimates in three of the trailing four quarters, which is impressive.
The stock has gained 11.9% over the past year to close the last trading session at $335.83
MCK’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
MCK also has an A grade for Growth and Value and a B for Sentiment and Quality. It is ranked first among 75 stocks in the Medical – Services industry.
To access additional ratings for MCK for Momentum and Quality, click here.
Centene Corporation (CNC)
CNC operates as a healthcare enterprise that provides programs and services to under-insured and uninsured families, commercial organizations, and military families in the United States. It operates in two segments, Managed Care and Specialty Services.
On January 23, CNC announced that it had completed the previously announced divestiture of Magellan Specialty Health to Evolent Health, Inc.
Sarah London, Chief Executive Officer of CNC, said, “With the close of this transaction, we look forward to launching our national strategic partnership with Evolent and expanding our relationship with Magellan Specialty Health to ensure our members and providers have access to a broad and integrated portfolio of value-based specialty solutions.”
CNC’s forward EV/Sales of 0.32x is 91.3% lower than the industry average of 3.66x. Its forward Price/Sales multiple of 0.25 is 93.9% lower than the industry average of 4.08.
During the fiscal year that ended December 31, 2022, CNC’s total revenues increased 14.7% year-over-year to $ 144.55 billion. Its adjusted net earnings increased 10.6% year-over-year to $3.36 billion, whereas adjusted EPS increased 12.2% year-over-year to $5.78.
CNC’s EPS is expected to rise 15.6% year-over-year to $2.12 for the current fiscal quarter ending March 2023. The company’s revenue is expected to come in at $36.08 billion. The company also has a remarkable earnings surprise history, surpassing the consensus EPS and revenue estimates in each of the trailing four quarters.
Shares of CNC declined 1.6% intra-day to close the last trading session at $62.58.
CNC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
The stock has a B grade for Value, Quality, and Sentiment. Within the A-rated Medical – Health Insurance industry, it is ranked #1 out of 10 stocks.
Beyond what is stated above, we’ve also rated CNC for Growth, Stability, and Momentum. Get all CNC ratings here.
Cardinal Health, Inc. (CAH)
CAH operates as an integrated healthcare services and products company in the United States, Canada, Europe, Asia, and internationally. It provides customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices, and patients in the home. The company operates in two segments, Pharmaceutical and Medical.
On March 6, CAH announced its collaboration with Signify Health (SGFY) to offer in-home clinical and medication management services through its Outcomes business. This collaboration will help reduce costs and eliminate gaps in care for more than 2.3 million members nationwide to support their treatment journey from prescription to pharmacy to home.
CAH’s forward EV/Sales of 0.10x is 97.4% lower than the industry average of 3.66x. Its forward Price/Sales multiple of 0.09 is 97.8% lower than the industry average of 4.08.
On February 10, 2023, CAH announced a quarterly dividend of $0.50 per share, payable on April 15, 2023.
CAH pays $1.98 annually as dividends. This translates to a yield of 2.84% at the current price, higher than the 4-year average dividend yield of 3.58%. Its dividend payments have grown at a CAGR of 1% over the past three years.
During the fiscal second quarter that ended December 31, 2022, CAH’s revenue increased 13.2% year-over-year to $51.47 billion. The company’s gross margin increased 2.9% year-over-year to $1.66 billion and its non-GAAP EPS attributable to CAH increased 3.9% year-over-year to $1.32.
CAH’s revenue is expected to rise 10.3% year-over-year to $49.45 billion for the fiscal third quarter ending March 2023. The company’s EPS is expected to rise 1.9% year-over-year to $1.48 for the same quarter. Additionally, the stock has topped consensus revenue estimates in each of the trailing four quarters.
CAH’s shares have gained 30.2% over the past nine months to close its last trading session at $69.01.
It’s no surprise that CAH has an overall A rating, which equates to a Strong Buy in our POWR Ratings system.
CAH has a B grade for Value, Growth, and Sentiment. The stock is ranked #2 in the Medical – Services industry.
Click here to access CAH’s grades for Momentum, Stability, and Quality.
Nature’s Sunshine Products, Inc. (NATR)
NATR is a natural health and wellness company that manufactures and sells nutritional and personal care products in Asia, Europe, North America, Latin America, and internationally. It offers general health products related to blood sugar support, bone health, cellular health, cognitive function, joint health, mood, sexual health, sleep, sports, energy, and vision.
NATR’s forward EV/Sales of 0.39x is 76% lower than the industry average of 1.63x. Its forward Price/Sales multiple of 0.48 is 56.6% lower than the industry average of 1.09.
NATR’s net sales came in at $102.75 million in the fourth quarter that ended on December 31, 2022. Gross profit was $74.16 million, while net income attributable to common shareholders came in at $1.95 million. Its earnings per share attributable to common shareholders came in at $0.10.
Street EPS estimate for the fiscal year 2023 of $0.28 reflects a rise of 600% year-over-year. Its revenue estimate for the same year of $429.70 million indicates an improvement of 1.9% from the prior-year quarter. Additionally, NATR has topped consensus revenue estimates in each of the trailing four quarters.
The stock has gained 22.7% year-to-date to close the last trading session at $10.21.
NATR’s robust prospect is reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
NATR has an A grade for Sentiment and Quality and a B for Value. It is ranked first among eight stocks in the B-rated Medical – Consumer Goods industry.
Click here for the additional POWR Ratings for NATR (Growth, Stability, and Momentum).
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MCK shares were trading at $341.85 per share on Friday morning, up $6.02 (+1.79%). Year-to-date, MCK has declined -8.73%, versus a 2.80% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...
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|CNC||Get Rating||Get Rating||Get Rating|
|CAH||Get Rating||Get Rating||Get Rating|
|NATR||Get Rating||Get Rating||Get Rating|
|SGFY||Get Rating||Get Rating||Get Rating|