Healthcare stocks are in the spotlight as we transition from the Trump administration to the Biden administration. Though Biden probably won’t push for universal healthcare such as that which exists in Canada and the Scandinavian countries, there is certainly the potential for meaningful change.

 
There is a good chance the Biden-Harris administration’s policies will extend healthcare to many more Americans. The increase in customers means additional revenue for healthcare companies. The only question is how this healthcare will be paid for and which specific stocks will benefit.
 
Let’s take a look at three healthcare stocks every investor should consider adding to their portfolio: UnitedHealth Group (UNH), Anthem (ANTM) and HCA Healthcare (HCA).
 
UnitedHealth Group (UNH)

Every investor should be salivating at the chance to own a piece of the largest healthcare services business on the planet. UNH serves more than 50 million patients in the United States alone. The company also serves more than five million people across the world. It appears as though the election is stabilizing the healthcare industry, setting the stage for UNH to climb higher.

UNH products and services include managed fee-for-service programs, point of service plans, health maintenance organizations and preferred provider organizations. Add in the fact that UNH makes money from prescription drugs and the managed care organization market and investors have all the more reason to be intrigued by the stock. UNH will likely expand its focus to telehealth in the months ahead.

UNH has “A” grades in the Industry Rank and Trade Grade POWR Rating components. The stock is ranked second of nine in the Medical – Health Insurance space. Of the 16 analysts who have studied UNH, 13 view it as a “Buy”, three consider it a “Hold” and none recommend selling. If UNH performs up to analysts’ expectations, the stock will pop by nearly 5%.

Anthem (ANTM)

This health benefits company provides a wide array of managed care plans to employers of varying sizes, individuals, senior markets and Medicaid. The POWR Ratings reveal ANTM has “A” grades in the Peer Grade, Trade Grade and Industry Rank components. ANTM is ranked first of nine stocks in the Medical – Health Insurance space. Of the nine analysts who have studied the stock, all of them recommend it as a “Buy”.

If ANTM performs up to the analysts’ expectations, it will hit $352.50, indicating there is more than 11% upside. ANTM has a fairly low forward P/E ratio of 14.40, meaning the stock is likely undervalued at $323. ANTM’s revenue is up nearly 16% on a year-over-year basis, largely because Medicare and Medicaid premiums increased. Furthermore, ANTM revenue is up nearly 18% across the first nine months of 2020.

ANTM could easily break through the $360 mark as the year comes to a close.

HCA Healthcare (HCA)

HCA operates nearly 200 hospitals along with nearly 180 additional facilities that provide general and acute care. Furthermore, HCA has more than 120 freestanding centers for surgery. The reduction in uninsured Americans has steered that many more people HCA’s way. Now that Biden is the President-elect, there is a good chance his proposal to generate a public healthcare option will boost the number of Americans with medical insurance even higher, helping HCA all the more. There is a very real possibility that upwards of 10% more of the country will obtain healthcare coverage in the years ahead. However, there is no guarantee Biden would be able to pass such legislation into actual law.

The POWR Ratings show HCA has an “A” Peer Grade along with a “B” Trade Grade. The stock is ranked first of eight in the Medical – Hospitals category. The average analyst price target for HCA is $155.44, meaning there is around 4% upside.

HCA is all the more attractive considering it has a low forward P/E ratio of 13. Though HCA is not a tech stock, a forward P/E ratio under 15 for a company of HCA’s size is noteworthy. Look for HCA to move toward $175 as the year rounds out.

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