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Healthcare, one of the largest and most complex sectors, is comprised of a broad range of companies that sell medical products and services. The healthcare sector includes companies that sell drugs, medical devices, and insurance, as well as hospitals and health care providers. 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 healthcare sector has underperformed relative to the S&P 500, with the Health Care Select Sector SPDR ETF (XLV) returning 14.3% compared to 18.4% for the S&P in the trailing 12 months. All figures are as of February 24, 2020.
Below, we’ll take a look at the top 3 stocks in the health care sector for March 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.
- Alexion Pharmaceuticals Inc.: Biopharmaceutical company Alexion researches and develops drug treatments for autoimmune and cardiovascular diseases. In Q4 2019, Alexion reported revenue of $1.4 billion, up 23% year-over-year (YOY).
- 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. For FY2019, Biogen reported revenue of $14.4 billion, a 7% increase YOY.
- 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.
- Gilead Sciences Inc.: Gilead Sciences is a biopharmaceutical company developing and marketing therapeutics designed to advance the care of diseases including HIV, AIDS, and liver disease, among others. Kite, a Gilead company, recently announced a critical U.S. Food and Drug Administration (FDA) approval related to a drug it is developing for use in patients with mantle cell lymphoma.
- Edwards Lifesciences Corp.: Edwards Lifesciences is a medical technology company focused on the production of heart valves and similar products.
- Boston Scientific Corp.: Specializing in minimally invasive medical devices, Boston Scientific markets a variety of products used in endoscopy, cardiology, urology, and more. The company reported sales of $2.9 billion for Q4 2019, an increase YOY of 13.4% on a reported basis.
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.
- ResMed Inc.: ResMed focuses on the development and manufacturing of products used to diagnose and treat sleep disordered breathing. In January, ResMed introduced the AirFit F30i, its first tube-up full face CPAP mask.
- Zoetis Inc.: Zoetis develops, manufactures, and distributes medicines and diagnostic products used in the care of livestock and pets. For Q4 2019, Zoetis generated revenue of $1.7 billion, up 7% YOY.
- Allergan PLC: Allergan is a global pharmaceutical company that produces a wide range of generic, brand-name, and over-the-counter medical products for sale around the world.
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