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The Top 3 Healthcare Stocks for 2021

Saturday, December 5, 2020 | Sean Sechler
The Top 3 Healthcare Stocks for 2021

When you consider the fact that we’ve been dealing with the largest global health crisis in recent memory, it makes a lot of sense to explore some of the best healthcare stocks heading into 2021. Hopefully, we will be able to put the pandemic behind us next year and return to normalcy, but the truth is that we won’t be able to accomplish that without help from the healthcare industry. There’s also the possibility of sweeping changes to the healthcare system as President-Elect Joe Biden begins his term.

While there are plenty of great healthcare stocks to choose from, investors might want to focus on companies that are working on a vaccine or a treatment for the COVID-19 virus, companies that have shown resilience during economic downturns, and companies that are are at the forefront of the digital health revolution. We’ve put together a list of the top 3 healthcare stocks for 2021 to help you add some intriguing opportunities to your investment plans.

Johnson & Johnson (NYSE:JNJ)

There are several reasons to consider adding shares of this global leader in the pharmaceutical, medical device, and consumer health care products industries. Johnson & Johnson has proven to be a resilient business over the years. The company reported a year-over-year sales increase of 1.7% in Q3 along with year-over-year EPS growth of 101.5%, which is impressive amidst the negative impacts of the pandemic. Thanks to its diverse product categories, investors can typically expect this stock to hold up well throughout different economic cycles.

There’s also the fact that Johnson & Johnson has a COVID-19 vaccine candidate with some noteworthy advantages. It only requires one dose and can be transported without the special infrastructure limitations that other vaccines are subject to. While the Phase 3 clinical trials for Johnson & Johnson’s vaccine candidate were temporarily halted, the trials will restart soon and could lead to prolific results. Finally, investors should consider the fact that Johnson & Johnson stock offers a 2.69% dividend yield along with a strong balance sheet with low debt levels. While there isn’t necessarily one standout growth driver for this stock in 2021, it’s still one of the best options in healthcare thanks to its numerous strengths.

Intuitive Surgical (NASDAQ:ISRG)

Another solid pick in the healthcare sector for 2021 and beyond is Intuitive Surgical. This is a company that has developed cutting-edge technology that allows surgeons to perform robotic-assisted surgery. The da Vinci robotic surgical system that the company pioneered is helping to make surgery more effective, less invasive, and a better overall experience for both patients and doctors. The stock is up over 30% year-to-date despite the challenges that the company has faced related to the pandemic and looks to be headed to new all-time highs before the year is over.

COVID-19 negatively impacted Intuitive Surgical this year since surgical procedures experienced a major slowdown. However, there are some encouraging signs that the volume of surgeries is heading in the right direction. Worldwide da Vinci procedures increased by 7% year-over-year in Q3, which is a good indication for the company’s 2021 prospects. Investors should be attracted to the company’s wide economic moat and the fact that it’s a business combining artificial intelligence, robotics, and healthcare in a truly groundbreaking way.

CVS Health (NYSE:CVS)

If you are interested in a healthcare stock that is seriously undervalued and could be in store for a very successful 2021, look no further than CVS Health. It’s the largest pharmacy health care provider in the U.S. and should benefit from a recent CEO change along with the expansion of the company’s HealthHUB stores. These are stores that offer expanded health care services and offerings that can help patients avoid going to the hospital and with managing chronic conditions conveniently and affordably. CVS Health has plans to expand its HealthHUB model to 1,500 locations by the end of 2021.

This company has also been providing COVID-19 testing to millions during the pandemic, which is bringing new customers into its stores. There’s also the fact that CVS Health will play a crucial role in distributing the COVID-19 vaccines once they are available. Over 70% of the U.S. population lives within three miles of a CVS store, which is a staggering statistic. Finally, thanks to the company’s ownership of Aetna, CVS Health could potentially benefit from the growth in Medicaid under a Joe Biden presidency.

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7 Stocks That Cathie Wood is Buying And You Should Too

If you’re an investor that likes to go with the “hot hand,” then they don’t get much hotter than Cathie Wood. The founder and CEO of ARK Investment Management delivered returns of over 100% in all five of her firm’s exchange-traded funds (ETFs) in 2020.

The names of her funds showcase some of the hottest emerging growth trends in the market: financial technology (fintech), genomic revolution, innovation, autonomous technology/robotics, and next generation internet.

As you would expect, these funds contain some of the hottest growth stocks from the past year. And in the aftermath of the tech selloff, Wood is not backing away. In fact, she’s doubling down on her strategy. It might not be exactly a matter of being greedy while others are fearful; perhaps more like being prepared while others are distracted.

But the other thing about Wood’s selections is that many of them are not obscure names. These are companies that were among the hottest names in 2020. Wood simply believes that they still have room to run. And that’s one reason you should consider making them a part of your portfolio.

In this special presentation, we’re giving you just seven of the stocks that Cathie Wood is buying or has bought recently. We’ve attempted to pick out at least one stock from each of the ARK ETFs. As with any investment decision, it’s important that you perform your own research before making a decision.

View the "7 Stocks That Cathie Wood is Buying And You Should Too".


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Johnson & Johnson (JNJ)2.3$170.22flat2.37%26.76Buy$185.70
Intuitive Surgical (ISRG)1.7$833.38flatN/A94.92Buy$806.06
CVS Health (CVS)2.3$84.33flat2.37%13.94Buy$92.14
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