What you need to know about investing in hospital stocks (2024)

FAQs

Should I invest in hospital stocks? ›

Advantages of Investing in Healthcare Stocks

Because people will always need healthcare, the healthcare sector provides very steady, consistent returns that are uncorrelated with the overall direction of the stock market. The U.S. healthcare sector is growing faster than the rest of the economy.

There is huge potential from investing in healthcare stocks and other investments that give you exposure to the healthcare sector. So, if you've done the analysis and they make sense for you, healthcare stocks could be exactly what your portfolio needs to take your investments to the next level.

Despite their defensive reputation, healthcare stocks do offer risks — some typical of any investment, some more unique to this industry. Regulatory: Subsectors such as pharmaceuticals and managed care are highly regulated by the government.

Healthcare stocks outperformed the S&P 500 last year.

The S&P 500 is up almost 2%. That isn't the start to the year the market was anticipating. The healthcare ETF fell only 3.5% for 2022, a far better showing than the S&P 500's nearly 20% drop.

Health-care stocks tend to be safer during recessions for the same reason as consumer staples: The services and products they offer are always in demand. This sector includes companies in the biotech, pharmaceutical and health care equipment industries, as well as health care providers and services.

When a person gets ill, they need treatment - regardless of if a recession is happening. This makes healthcare and pharmaceuticals a largely recession-proof stock choice.

If the institution is well managed, they can make a decent profit. Hospitals over the last ten years have ranged in margin from four percent to eight percent net profit according to the American Hospital Association. About 25 percent of the 6,000 hospitals have a negative financial margin.

Health care presents the opportunity to invest in companies that are constantly innovating to improve quality of life and raise productivity. It is hard to put a value on vaccines, cancer drugs, joint replacements, and pacemakers. At the same time, health care names do not dominate the market like big tech.

Why should I invest in hospitals? ›

It is a very cost-effective approach, most especially if you are looking at long-term care. Moreover, the benefit extends to the parents, spouse, and children. With the ever-increasing cost of medical services, getting hold of an investment like hospital stocks would provide protection against inflation.

Defensive stocks are those that hold up well during periods of economic downturns. The healthcare sector is considered one of the most reliable defensive industries because these companies benefit from growing consumer demand regardless of the overall economy.

2023 promises to be another strong year for the healthcare sector, which tends to do well year in and year out due to the inelastic demand for its products and services.

Most investors should invest 5% to 10% of their portfolio in health care, Michelson says. "Investing more can create undue sector risk in an investor's portfolio," he says.

With world-class experts working together across specialties to give you the unparalleled care you deserve, Mayo Clinic is the destination for all who need certainty, options and hope. Mayo Clinic care is covered by most insurance plans.

What is the average healthcare stock price? ›

The Healthcare Services 52-week high stock price is 20.54, which is 66.5% above the current share price. The Healthcare Services 52-week low stock price is 11.55, which is 6.4% below the current share price. The average Healthcare Services stock price for the last 52 weeks is 14.87.

In the short run, they are considered a defensive hedge against inflation and a slowing economy since the demand for medical care remains constant no matter the macroeconomic environment. In the long term, a growing world population, especially among the aged, will raise demand for healthcare services.

Healthcare stocks have remained in vogue through volatile markets, driven by increased interest in the sector during COVID-19. Yet the sources of the sector's appeal run deeper than the pandemic's effects and can provide resilient return potential through uncertain market conditions in 2023.

The best recession stocks include consumer staples, utilities and healthcare companies, all of which produce goods and services that consumers can't do without, no matter how bad the economy gets.

What stocks did well during the Great Depression? ›

A 2021 report from the Economic Research Institute (ERI) found that the average annual CEO pay in most nonprofit industries was between $100,000 and $200,000 in 2018. The two exceptions were university CEOs, who were paid an average of $350,000, and hospital CEOs, who were paid on average $600,000.

For-profit hospitals tend to serve lower-income populations, while nonprofit hospitals are generally found in communities with higher average incomes and fewer under- and uninsured patients. Looking into the uncompensated care disparity, Definitive Healthcare data is able to offer some insights.

Stronger Tailwinds for Healthcare Sector

These drivers are aging populations, growing spending on healthcare in the developing world, and technological innovations not just in devices but also in drug development. But with greater visibility in their future earnings, healthcare stocks did better in 2022.

Overall, investing in healthcare ETFs over healthcare stocks is a great way for risk-averse investors to gain exposure to some of the best-in-class names in the healthcare sector, which include Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), and Moderna, Inc.

Summary. We think healthcare companies are quite resilient during periods of inflation because their products are not substitutable and they deliver innovation. Healthcare has lagged behind many other areas in terms of its adoption of technology.

Because of the constant demand for healthcare services, healthcare stocks tend to remain stable during the various phases of the business cycle. These stocks can also perform better than other sectors in the late stages and contraction periods of a growth cycle.

Where will stock be in 5 years? ›

Based on our forecasts, a long-term increase is expected, the "MA" stock price prognosis for 2028-03-01 is 458.278 USD. With a 5-year investment, the revenue is expected to be around +24.9%. Your current $100 investment may be up to $124.9 in 2028.

Valuation metrics show that UnitedHealth Group Incorporated may be undervalued. Its Value Score of A indicates it would be a good pick for value investors. The financial health and growth prospects of UNH, demonstrate its potential to outperform the market. It currently has a Growth Score of C.