If you can count, you may find healthcare stocks focused on the aging population to be a compelling opportunity. What do I mean? When it comes to the senior care sector, the fundamental argument comes down to one word repeated three times: demographics, demographics, demographics.
According to the U.S. Census Bureau, the “U.S. population age 65 and over grew nearly five times faster than the total population over the 100 years from 1920 to 2020.” Not only that, the older population reached 55.8 million, representing 16.8% of the nation in 2020. Thanks to the post-World War II baby boom, a mass of humanity entered the frame.
However, here’s where the counting starts. Aside from untimely expirations, people tend to get older. Not only that, advancements in healthcare along with lifestyle education have contributed to many people living longer. That’s only going to add more demand to the senior care ecosystem.
So, it really comes down to recognizing basic realities. With that in mind, below are three healthcare stocks to consider.
Brookdale Senior Living (BKD)
Based in Brentwood, Tennessee, Brookdale Senior Living (NYSE:BKD) presents an obvious case for healthcare stocks relevant to the aging population. Falling under the medical care facilities industry, Brookdale owns, manages and operates senior living communities throughout the nation. With an increasing number of people entering their golden years, BKD stock should enjoy a robustly bullish narrative.
Still, prospective investors will require some patience. In the past four quarters, the company incurred a loss per share of 19 cents. That’s not the greatest thing ever. However, it’s fair to point out that experts anticipated a loss of 21 cents per share on average. Therefore, the “earnings” surprise came out to just under 5%.
Notably, during the trailing 12 months (TTM), Brookdale generated revenue of $2.9 billion. In the most recent quarter, BKD’s year-over-year sales growth rate reached 4.3%. For fiscal 2024, analysts are targeting a top line of $3.14 billion, up 4.2% from last year. In fiscal 2025, sales could rise to $3.3 billion, implying 5.1% up. It’s a slow-and-steady growth play among senior-focused healthcare stocks.
Becton Dickinson (BDX)
Conducting business in the medical instruments and supplies industry, Becton Dickinson (NYSE:BDX) develops, manufactures and sells medical supplies, devices, laboratory equipment and diagnostic products for various clients, including healthcare institutions, physicians, life science researchers and many others. While not directly related to senior care, its diagnostic specialties can help mitigate or management the chronic conditions that often accompany advanced age.
With such broad relevancies come a level of financial resilience and consistency. In the past four quarters, Becton posted an average earnings per share of $3.06. This figure beat analysts’ estimate targeting $2.93. Subsequently, the average earnings surprise landed at just under 5%.
What’s particularly attractive about BKD stock is that the market prices it at 3.27X trailing-year sales. However, between the first quarter of 2023 to Q1 2024, this metric stood at 3.8X. What’s more, experts anticipate sales to rise to $20.23 billion by year’s end. That would be up 4.4% from 2023. Also, in fiscal 2025, sales hit $21.45 billion, up 6%. Overall, it makes a solid case for healthcare stocks to buy.
CVS Health (CVS)
Easily in my opinion the riskiest idea on this list of healthcare stocks, CVS Health (NYSE:CVS) benefits from speculative appeal. Because shares have been significantly deflated – down about 29% since the start of the year – a bounce back can bring significant rewards. While not a pure play for senior care, there are plenty of attributes.
As InvestorPlace’s Yiannis Zourmpanos pointed out, CVS offers a diversified business model, covering healthcare benefits, pharmacy services and consumer wellness. All three segments are important for obvious reasons for seniors. As people age, things just stop working well. It’s life, it’s reality. As such, even though CVS clearly has its challenges, it also offers a rational bullish case.
A compelling aspect to the business is that CVS stock trades at only 0.2X trailing-year sales. In the past year, this metric stood at 0.28X. However, revenue has been growing steadily, meaning that the company may offer a legitimate discount.
For fiscal 2024, analysts see revenue rising 3.1% to $368.76 billion. In the following year, the top line could hit just over $387 billion. If you can handle the heat, it’s one of the healthcare stocks to consider.
On the date of publication, Josh Enomoto 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.