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Health care, one of the largest and most complex sectors, is comprised of a broad range of companies that sell medical products and services. The sector includes companies that sell drugs and medical devices, hospitals and health care providers, and companies that sell insurance and related products. Some of the largest health care stocks in the world include Johnson & Johnson (JNJ) and Pfizer, Inc. (PFE). In the trailing 12-month period, the health care sector has underperformed relative to the S&P 500, with the Health Care Select Sector SPDR ETF (XLV) returning 17.0% compared to 24.3% for the S&P in the trailing 12 months. All figures are as of January 27, 2020.
Below, we’ll take a look at the top 3 stocks in the health care sector for February in terms of the best value, the fastest earnings growth, and the most momentum.
Health Care Stocks with the Best Value
Here are the health care stocks in the S&P 500 with the lowest 12-month trailing price-to-earnings (P/E) ratio in the sector. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- Biogen Inc.: Biogen focuses on the discovery, development, and commercialization of pharmaceutical treatments, with a strong focus on the fields of neurology, immunology, and hematology. The company recently announced plans to acquire a clinical stage asset with potential applications in the treatment of Alzheimer’s and Parkinson’s diseases from Pfizer for $75 million up front.
- Walgreens Boots Alliance Inc.: Walgreens Boots Alliance owns and operates more than 18,750 pharmacy and health care retail stores in 11 countries. In its most recent quarter, Q1 FY2020, Walgreens Boots Alliance reported year-over-year (YOY) sales increases of 1.6%, although EPS decreased by 19.8%.
- Pfizer Inc.: Pfizer is a pharmaceutical company that develops medicines, medical devices, vaccines, and other products related to oncology and cardiovascular issues.
Health Care Stocks with the Fastest Earnings Growth
Here are the health care stocks in the S&P 500 with the highest year-over-year earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
- Centene Corp.: Centene provides health care coverage to uninsured and under-insured individuals through a variety of government subsidized programs including Medicaid.
- Incyte Corp.: Incyte focuses on the discovery, development, and commercialization of oncology drugs. The company recently revealed that a key clinical trial for its ruxolitinib cream met the drug’s primary endpoint in patients with atopic dermatitis, a promising sign for the medicine’s potential.
- Teleflex Inc.: Teleflex designs and manufactures medical technology products, focusing on single-use medical devices for diagnostic and therapeutic procedures as well as surgeries. The company just received FDA approval for the Wattson Temporary Pacing Guidewire, a piece of medical technology to be used in certain types of heart surgeries.
Health Care Stocks with the Most Momentum
These are the health care stocks in the S&P 500 that had the greatest total return over the past 12 months.
- Zoetis Inc.: Zoetis develops, manufactures, and distributes medicines and diagnostic products used in the care of livestock and pets.
- Danaher Corp.: Danaher develops and distributes medical and dental diagnostic products and services including microscopes, centrifuges, prosthesis, digital imaging systems, and more. In Q3 2019, Danaher reported a YOY EPS decline of 4.5%.
- Dentsply Sirona Inc.: Dentsply Sirona focuses on the development and manufacturing of dental supplies, including prosthetics, sealants, and dental instruments. In December, the company declared a quarterly cash dividend of $0.10 per share of common stock.
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