Healthcare Gems: 3 Essential Long-Term Stock Picks

Stocks to buy

Healthcare stocks are a great way for investors to achieve long-term wealth creation. The healthcare sector is essential to solving some of the world’s most pressing issues from heart disease, Alzheimer’s, and cancer. 

And to be sure, there are a number of different healthcare companies that have outperformed the S&P 500 over the last decade. However, these companies are few and far between. Investors must choose wisely in order to prevent portfolio destruction.

According to the WHO, global healthcare spending reached a record $9 trillion in 2020, accounting for 11% of global GDP. As the global economy continues to recover from a post-pandemic world, these 3 healthcare stocks should not be ignored.

Now, let’s discuss the 3 best long-term healthcare stocks to buy!

Vertex Pharmaceuticals (VRTX)

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Vertex Pharmaceuticals (NASDAQ:VRTX) is one of the best long-term healthcare stocks to buy. Often flying under the radar, Vertex continues to reward its shareholders with market beating returns. Over the last 5 years, Vertex’s stock has risen 105% vs the SP 500’s 72%. 

Vertex is currently the leading provider of therapy addressing cystic fibrosis. Their FDA approved drug, Trikafta, is seeing continued momentum as sales growth beat analyst expectations. In Q3 2023, Vertex revenue grew 6% year-over-year (YOY) to $2.48 billion. Independently, Trikafta saw double digit sales growth of 13% YOY.

The company is not just seeing continued momentum with Trikafta, they’re developing other novel treatments on the path towards FDA approval. This includes their partnership on the brink of FDA approval with Crispr Therapeutics (NASDAQ:CRSP), leveraging their gene-editing technology to develop a novel treatment for sickle cell disease.

With $13.6 billion in cash and marketable securities, Vertex is the best no-brainer long-term healthcare stocks to buy.

UnitedHealth Group (UNH)

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UnitedHealth Group (NYSE:UNH) is an American multinational healthcare and insurance company headquartered in Minnetonka, Minnesota. Impressively, they are the 11th largest company in the world by revenue.

UnitedHealth Group is another sleeper healthcare stock that has been on a tear recently. They averaged EPS growth of 15% over the last 5 years, and its dividend has grown substantially. For the FY22 fiscal year, revenue grew 13% YOY to $324.16 billion. Net income also grew 16% YOY to $20.12 billion, or $21.18 per share.

What makes UnitedHealth Group a relatively safe choice for long-term healthcare stock investors is that they are highly diversified. In Q3 2023, Optum Health and UnitedHealthcare saw strong double digit growth. CEO, Andrew Whitty is bullish on the company’s ability to provide ‘’diversified growth in the coming years.’’ So much so, apparently, that the company raised their FY 2023 EPS forecast from $23.60 to $23.75 per share to $24.85 to $25.00 per share.

AbbVie (ABBV)

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AbbVie (NYSE:ABBV) is one of the largest pharmaceutical companies in the world. The company went public in 2011 as a spin-off Abbott Laboratories. While they own a number of commercialized drugs, but their most notable one is Humira. 

AbbVie’s stock has fallen 10% in 2023 due to sluggish sales and EPS growth. In Q3 2023, revenue fell 6% YOY to $13.93 billion. Revenue for their immunology portfolio also fell 11.3%, with Humira sales falling 36% respectively.

However, despite this and broader slowdowns in the healthcare sector, the company has remained resilient. With Humira sales growth slowing, CEO Richard Gonzalez is focused on diversifying away into other novel treatments. The company has signaled commitment to their shareholders in their latest quarter, raising their full year guidance. AbbVie raised their full year EPS guidance from $10.86 – $11.06 per share to $11.19 – $11.23 per share. This suggests a turnaround is likely in 2024, and investors should snap up this long-term healthcare stock pick before the new year. 

On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Terel Miles is a contributing writer at InvestorPlace.com, with more than seven years of experience investing in the financial markets.

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