The healthcare industry, which thrived during the COVID-19 pandemic, is likely to remain in the limelight amid growing health awareness, an aging population, and advanced technological breakthroughs.
Moreover, the increasing use of data analytics in healthcare and companies focusing on preventive care are boosting the industry. Also, amid the increasing penetration of smartphones, improved internet connectivity and advancement in healthcare IT infrastructure are helping to expand the digital healthcare market.
The global digital healthcare market is anticipated to grow at a CAGR of 23.7% until 2030.
Furthermore, the demand for healthcare companies’ products and services is inelastic, which makes them ideal holdings amid market turmoil. According to CNBC’s Jim Cramer, healthcare stocks have been reasonably stable in 2022 because they are recession-resistant or perform well regardless of broader economic situations.
Given the backdrop, investors could consider buying no-brainer medical stocks Nature’s Sunshine Products, Inc. (NATR), Abbott Laboratories (ABT), Humana Inc. (HUM), Molina Healthcare, Inc. (MOH), and McKesson Corporation (MCK), in 2023.
Nature’s Sunshine Products, Inc. (NATR)
Natural health and wellness company NATR primarily manufactures and sells nutritional and personal care products in Asia, Europe, North America, Latin America, and internationally.
On November 3, 2022, CEO Terrence Moorehead said, “We remain confident that we will navigate this unique period of volatility and uncertainty, bolstered by our strong balance sheet and team of experts on the ground.”
NATR’s forward EV/Sales of 0.38x is 78.4% lower than the industry average of 1.76x. Its forward Price/Sales of 0.46x is 59.4% lower than the industry average of 1.13x.
NATR’s trailing-12-month gross profit margin of 71.59% is 128.2% higher than the industry average of 31.37%. Its trailing-12-month ROTA of 4.96% is 48% higher than the industry average of 3.60%.
NATR’s selling, general, and administrative expenses came in at $36.79 million for its third quarter ended September 30, 2022, down 6.9% year-over-year. Its total current liabilities came in at $63.89 million for the period ended September 30, 2022, compared to $76.67 million for the period ended December 31, 2021.
NATR’s revenue is expected to rise marginally year-over-year to $420.61 million in the current fiscal year 2023. Its EPS is estimated to grow 280% year-over-year to $0.18 in 2023. Over the past month, the stock has gained 26.9% to close the last trading session at $10.56.
NATR’s strong fundamentals are reflected in its POWR Ratings. The stock’s overall A rating indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
NATR has an A grade for Value and Quality and a B for Stability and Sentiment. In the B-rated Medical – Consumer Goods industry, it is ranked first among nine stocks. Click here for the additional POWR Ratings for Growth and Momentum for NATR.
Abbott Laboratories (ABT)
ABT discovers, develops, and sells healthcare products focused on cardiovascular, diabetes care, diagnostics, neuromodulation, nutrition, and medicine worldwide. Its products are sold directly to wholesalers, distributors, government agencies, healthcare facilities, pharmacies, and independent retailers.
On January 26, 2023, ABT announced that the FDA approved its ProclaimTM XR spinal cord stimulation (SCS) device for treating painful diabetic peripheral neuropathy (DPN), a devastating consequence of diabetes. The sale of this device is expected to expand ABT’s revenue margin.
ABT’s trailing-12-month gross profit margin of 56.53% is 1.9% higher than the industry average of 55.48%. Its trailing-12-month EBITDA margin of 27.58% is 640.2% higher than the industry average of 3.73%.
ABT’s net sales increased marginally year-over-year to $43.65 billion for its fiscal year that ended December 31, 2022. Its diagnostics sales came in at $16.58 billion, up 6% year-over-year.
Street expects ABT’s revenue to increase 5.2% year-over-year to $42.12 billion in 2024. Its EPS is estimated to grow 9.9% year-over-year to $4.87 in 2024. It surpassed EPS estimates in all four trailing quarters. Over the past three months, the stock has gained 11.7% to close the last trading session at $110.55.
ABT has an overall rating of B, which equates to a Buy in our POWR Ratings system.
It has a B grade for Value, Stability, Sentiment, and Quality. ABT is ranked #9 out of 148 stocks in the Medical – Devices & Equipment industry. Click here to see the additional POWR Ratings for ABT (Growth and Momentum).
Humana Inc. (HUM)
HUM and its subsidiaries operate as a health and well-being company in the United States. It operates through three segments: Retail; Group and Specialty; and Healthcare Services.
HUM’s forward EV/Sales of 0.63x is 84.6% lower than the industry average of 4.11x. Its forward Price/Sales of 0.66x is 86% lower than the industry average of 4.71x.
Its trailing-12-month EBITDA margin of 4.81% is 29.1% higher than the industry average of 3.73%, while its trailing-12-month asset turnover ratio of 1.90% is 458.9% higher than the industry average of 0.34%.
HUM’s total revenues came in at $22.80 billion for the third quarter that ended September 30, 2022, up 10.2% year-over-year. Its premium revenue came in at $21.47 billion, up 8% year-over-year. Moreover, its income from operations increased 86.6% year-over-year to $1.17 billion.
HUM’s revenue is expected to increase 9.7% year-over-year to $102.05 billion in the fiscal year 2023. Its EPS is estimated to grow 11.8% year-over-year to $28.01 in 2023. It surpassed EPS estimates in all four trailing quarters. The stock has gained 30.4% over the past year to close the last trading session at $511.70.
It’s no surprise that HUM has an overall A rating equating to a Strong Buy in our POWR Ratings system.
It has a B grade for Growth, Value, and Quality. It is ranked #3 in the A-rated Medical – Health Insurance industry. Click here for the additional POWR Ratings for Stability, Momentum, and Sentiment for HUM.
Molina Healthcare, Inc. (MOH)
MOH offers managed healthcare services under Medicaid and Medicare programs and through state insurance marketplaces. The company operates through four segments: Medicaid; Medicare; Marketplace; and Other.
In terms of forward EV/Sales, MOH is trading at 0.50x, 87.8% lower than the industry average of 4.11x. The stock’s forward Price/Sales multiple of 0.56 is 88.1% lower than the industry average of 4.71.
Its trailing-12-month EBITDA margin of 4.76% is 27.6% higher than the industry average of 3.73%. Furthermore, the stock’s 2.54% trailing-12-month asset turnover ratio is 643.9% higher than the industry average of 0.34%.
MOH’s total revenues came in at $7.93 billion for the third quarter that ended September 30, 2022, up 12.6% year-over-year. Its net income increased 60.8% year-over-year to $230 million, while its EPS came in at $3.95, representing a 60.6% year-over-year rise.
The consensus revenue estimate of $33.07 million for the fiscal year 2023 indicates a 4.5% increase year-over-year. Its EPS is expected to grow 10% year-over-year to $19.59 in 2023. It surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained 7.4% to close the last trading session at $311.83.
MOH’s overall A rating equates to a Strong Buy in our POWR Ratings system.
It has a B for Growth, Value, and Quality. It is ranked #4 in the same industry. Beyond what is stated above, we’ve also rated MOH for Momentum, Stability, and Quality. Get all MOH ratings here.
McKesson Corporation (MCK)
MCK is a diversified healthcare service provider focusing on advancing patients’ health outcomes globally. The company operates through four segments: U.S. Pharmaceutical; Prescription Technology Solutions (RxTS); Medical-Surgical Solutions; and International.
In terms of forward EV/Sales, MCK is currently trading at 0.21x, 94.8% lower than the industry average of 4.11x. The stock’s forward Price/Sales multiple of 0.19 is 95.9% lower than the industry average of 4.71.
MCK’s EBIT margin of 1.20% is higher than the negative 1.76% industry average. Its asset turnover ratio of 4.29% is substantially higher than the 0.34% industry average.
MCK’s total revenues increased 5.4% year-over-year to $70.16 billion for the second quarter that ended September 30, 2022. Moreover, its income from continuing operations came in at $932 million, up 249.1% year-over-year. Also, its EPS came in at $6.46, up 277.8% year-over-year.
Analysts expect MCK revenue to increase 4.6% year-over-year to $276.15 billion in the current fiscal year 2023. Its EPS is expected to grow 4.6% year-over-year to $24.79 in 2023. The stock has gained 47.5% over the past year to close the last trading session at $378.68.
MCK’s POWR Ratings reflect its promising prospects. MCK’s overall A rating translates to a Strong Buy rating in our POWR Ratings system.
It has an A grade for Growth and a B for Value, Stability, and Quality. It is ranked first out of 79 stocks in the Medical – Services industry. To see additional POWR Ratings for Growth, Sentiment, and Momentum for MCK, click here.
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NATR shares were unchanged in premarket trading Wednesday. Year-to-date, NATR has gained 26.92%, versus a 6.29% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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