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The two best healthcare stock picks for 2024

by Thea Coates Finance Reporter
15th Mar 24 10:02 am

Healthcare is a constantly growing industry with a never-ending demand, making it an attractive choice for many investors. By the decade’s end, healthcare spending is projected to double its current $4.3 trillion.

  • UNH is the largest healthcare insurer globally and has seen an over 20% year-over-year increase with its aggressive expansion strategy.
  • LLY is a pharmaceutical company that has seen great success from Trulicity and Mounjaro and is expected to grow only in the future.
  • With healthcare spending increasing, these stocks offer a solid opportunity for growth in the healthcare sector.

But, with the sheer size of this industry, it can seem all but impossible to wade through the thousands of stocks in health care. However, Joel Lim, a financial analyst at Trading.Biz, has narrowed these very promising stocks to two that show tremendous yearly dividends and own a sizeable share of the healthcare market.

You don’t want to miss out on the returns you can get from UnitedHealth Group and Eli Lilly and Co. Both have delivered strong runs during their lifetimes to set up a solid position in the industry with the ability to grow still and increase potential value.

  1. UnitedHealth Group (UNH)

UnitedHealth Group has established itself as the world’s largest health insurance provider. It is also the most publicly traded stock in the industry, with a market cap of around $500 billion. UnitedHealth Group features a collection of companies providing diverse healthcare services, offering investors stability and a history of generous returns.

UnitedHealth Group’s annualized return of 21.81% over ten years beats the average S&P 500 rate of only slightly over 10%. In the last five years alone, the stock has nearly doubled in value due to its constant search for expansion.

The hunger for growth has led UnitedHealth Group to make over 20 acquisitions in a few years, including large buyouts in markets with growing demand, such as senior care and biotech. Financial Analyst Joel Lim says, “Through strategic acquisitions, UnitedHealth Group is lining itself up for assured growth in years to come and confirming its seat at the top of health care.”

In addition, UnitedHealth is valued lower than the industry average and topped $371 billion in revenue last year, reaching a growth rate of 14.64%. The growing market cap and revenue fuel this stock’s hefty returns for investors and is projected to remain a top player in the industry.

  1. Eli Lilly and Co. (LLY)

Eli Lilly and Co. is a pharmaceutical giant providing the most in-demand products, soaring to all-time highs this year. This stock saw a 28% growth in revenue in Q4 last year, compared to Q4 2022, ending with $9.35 billion.

Income is also rising thanks to Eli Lilly and Co.’s top-selling products, including Trulicity and Mounjaro, which have revenue of $7.1 billion and $5.1 billion, respectively. Its hold on the market does not stop there.

Financial Analyst Joel Lim says, “Eli Lilly and Co. is in the best position to take advantage of the trendy GLP-1 class of weight loss drugs, promising a huge boost in sales this year.” The product is Zepbound, deemed an obesity treatment by the FDA, an alternate labelling of the top-selling drug Mounjaro.

Since its release in 2023, it has already generated over $175 million. Riding that momentum, Eli Lilly and Co. announced its expectations to reach $40.4 to $41.6 billion in revenue this year, and you don’t want to miss out.

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