Healthcare is a persistent crisis point for Americans, with our population living longer yet experiencing higher rates of chronic disease than past generations, and we need to find a way to meet those needs at a population level. One solution: investment. A growing community of healthcare startups, along with established companies, are introducing innovative solutions that aim to meet patients where they live.
Based on their healthcare offerings, savvy investors should consider buying these four stocks and holding on for the ride in the long-term. Unless there’s a major shakeup in the near future, these healthcare-centered companies are changing the landscape of how we care for our communities.
Walgreens
Walgreens, formally Walgreens Boots Alliance Inc. (NASDAQ: WBA), recently hit some bumps and landed flat at a five year low, with WBA trading below $60, but don’t discount them yet. The company is still trading at over 2.5 times book value and over 11 times earnings, and it promises to be at the heart of healthcare for aging populations. From basic healthcare products like OTC medications and household medical equipment to the pharmacy sector and pop-up clinics, WBA can easily come back and rally in the coming months and years.
Centene
Most people haven’t heard of Centene (NYSE: CNC), but the St. Louis-based insurer is set to make waves. That’s because the company focuses on a large, vulnerable market sector: the uninsured and underinsured. As part of that focus, CNC receives significant government subsidies, and the company also has buying power because they’re a pharmacy benefits manager. That can be a serious advantage when it comes to getting drugs into low-income patients’ hands.
Focusing on services for the uninsured or underinsured is a good move right now because they’re sorely needed and likely to be heavily utilized. Despite the insurance mandate, there are at least 28 million uninsured Americans, and they’re flooding urgent care centers and ERs for minor complaints. Some will turn to telehealth, but bringing more traditional insurance options to the table for these individuals should be a top priority.
Welltower
Welltower (NYSE: WELL) offers an interesting blend of services and is the United States’ largest public healthcare REIT – but what does that mean, exactly? By focusing on property, WELL is able to leverage those spaces to provide senior housing as well as outpatient and post-acute care services, particularly in major urban areas. This combination service model is ideal for an aging population that is likely to seek greater freedom in their housing options, yet will still require complex medical support.
WELL offers services in the vein of assisted living, then, but with a higher level of medical care integrated directly into their property holdings. Additionally, as an investor, REITs are required to pay out 90% of taxable income as shareholder dividends. Now is the time to get on board with WELL and be on the lookout for their services in New York City, Boston, and London.
Osmotica Pharmaceuticals
At a time when the pharmaceutical market is dominated by a few large companies, small drug developers have a difficult time making an impact. That’s why Osmotica Pharmaceuticals (NASDAQ: OSMT) is so interesting; their small parcel of products focus heavily on dosing using a proprietary osmotic drug delivery system. This places OSMT in a unique position relative to R&D expenses – they primarily need to re-engineer existing drugs to fit this system. And as a small company, OSMT is affordable, trading under $7 per share but with a strong buy rating. Even if OSMT doesn’t make it big, they’re strong contenders for exciting acquisition opportunities down the line.
2018 was a big year in healthcare investing, with US healthcare venture capital funding hitting $9.6 billion and device IPOs doubling year over year, and 2019 promises to bring the same. Now is the time to choose long-term investments and stick with them. Our country’s health needs are only going to continue to grow, and innovative health companies can rise to the challenge.
Disclosure: I do not own any of the stocks mentioned in this article.
