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2 No-Brainer Healthcare Stocks to Buy With $1,000
Some stocks look so attractive that they are hard to pass up. These are often industry leaders with robust underlying businesses, competitive edges, and plenty of growth potential. That describes Novo Nordisk (NYSE: NVO) and HCA Healthcare (NYSE: HCA) well. These two healthcare leaders have generally delivered above-average returns, yet they have plenty left in the tank.
For those with $1,000 to spare that isn't earmarked for emergencies, here's why putting that money in these two companies would be a great move.
1. Novo Nordisk
Novo Nordisk, a longtime leader in the pharmaceutical industry , has become even more of a household name in recent years. That's because of the Denmark-based drugmaker's work in obesity care. Novo Nordisk's Wegovy, a weight loss therapy, is one of the leaders in this fast-growing market. Ozempic, another famous brand that shares Wegovy's active ingredient (semaglutide), is a top-selling diabetes medicine. These two are helping Novo Nordisk deliver excellent financial results.
In the first half of the year, the company's net sales increased by 24% year over year to 133.4 billion Danish kroner ($19.6 billion), an excellent performance for a pharmaceutical giant. Despite its strong results and clinical progress, Novo Nordisk has encountered some issues . For instance, the company failed to earn approval for a once-weekly insulin medicine in the U.S. partly due to manufacturing issues, although it was already approved in the European Union, China, and Japan (where it is called Awiqli).
Still, occasional regulatory roadblocks aren't that big of a deal for a company that is this successful. Novo Nordisk is earning approvals elsewhere. Wegovy earned label expansion in March to reduce the risk of various cardiovascular events in diabetes or overweight patients. In all likelihood, it will earn many more green lights.
Further, Novo Nordisk should have plenty more growth drivers beyond Ozempic and Wegovy. The company should remain a leader in developing anti-obesity treatments -- even with many of its peers looking to eat its lunch. Novo Nordisk has more experience than any of its competitors in developing medicines in this field, which grants the company a bit of a competitive edge. Its pipeline is full of such drugs.
According to some estimates, Novo Nordisk's Cagrisema, one of the most promising investigational therapies in this area, could generate as much as $20.2 billion in revenue by 2030. Novo Nordisk has many more pipeline candidates beyond its core areas of diabetes and obesity. The real reason to buy the company lies in its innovative quality and demonstrated ability to perform well over long periods.
With shares changing hands for just under $135, investors can buy seven with $1,000.
2. HCA Healthcare
Over the last five years, HCA Healthcare has demonstrated its resilience. Perhaps that's to be expected of a hospital chain, one of the leading in the U.S. After all, HCA Healthcare offers services -- facilities that help care for the sick -- that will always be in demand. However, there is more to the story. HCA Healthcare had to navigate pandemic-related disruptions to its business, including admission and occupancy rate fluctuations, which are important to its ability to generate revenue. HCA Healthcare then dealt with economic issues, increased labor costs, and more.
It did all that while still growing its market share from 26.5% at the end of 2019 to 28% a year and a half later. HCA Healthcare has continued to grow its position since, according to management. In other words, it handled these troubled years better than most of its peers that offer the same services it does. And financial results continue to be pretty strong. In the second quarter, HCA Healthcare's revenue of $17.5 billion increased by a decent 10% year over year to $17.5 billion, and the company's earnings per share jumped by 29% to $5.53.
HCA Healthcare will encounter issues again, as all corporations do occasionally, but its long-term prospects look bright. Breaking into its field is incredibly capital-intensive -- building dozens of facilities is expensive. Gaining the business and the trust of physicians, patients, and third-party payers is no piece of cake either. That's why HCA Healthcare has a significant advantage over newcomers.
And even compared to other well-established peers, its market share gains, which date back to at least 2011 (when it had a 23% share), show that it has what it takes to remain competitive in an industry with long-term potential due to demographic changes such as the world's aging population.
As of this writing, HCA Healthcare's shares are worth $367 apiece, so $1,000 is good for two of them.
Before you buy stock in Novo Nordisk, consider this: