Because of the pestilence that has taken over the economy, the record-long bull market came to a sudden end in early 2020. However, the health care sector tends to perform well late in the economic cycle and even hold firm in recessions, offering a welcome reprieve in challenging markets like the one that investors face today. As society races for a treatment or cure for COVID-19, the health care sector is more relevant than ever. These are 3 of the best health care stocks to buy in 2020 and a look at how they’ve performed year-to-date through April 21. While they’ve collectively fallen, as a portfolio, they’re beating the S&P 500, -10.9% to -15.3%.
DaVita (ticker: DVA)
DaVita is a 9 billion dollar Denver-based company with a huge network of nearly 2,700 outpatient dialysis centers. Trading for 12 times forward earnings, analysts expect DVA to grow earnings per share at an 18% annualized rate over the next five years, partially driven by a $2 billion stock buyback program. Warren Buffett also happens to be a fan of DVA, owning about 30% of the company via Berkshire Hathaway (BRK.A, BRK.B).
DVA year-to-date return (through 4/21/20): -3.3%
S&P 500 YTD return: -15.3%
Novartis (ticker: NVS)
Novartis is a 200 billion dollar Swiss drugmaker global pharmaceutical powerhouse that health care investors familiarize with. NVS ended 2019 with 15 different drugs that grossed at least 1 billion dollars a year. Two drugs (Cosentyx and Gilenya) each grossed more than $3 billion dollars in 2019. The new CEO, who took over in 2018, Vasant Narasimhan, has proved to be an aggressive leader — a trait needed in the competitive pharma industry.
NVS YTD return: -3.4%
S&P 500 YTD return: -15.3%
AbbVie (ticker: ABBV)
Another drug producing powerhouse is AbbVie. AbbVie is a 120 billion dollar company that was named one of the 10 best overall stocks to buy in 2020. Although AbbVie’s growth potential isn’t as attractive as other health care competitors, ABBV does produce the best-selling drug in the world, Humira.a After a $63 billion acquisition of Allergan, AbbVie now owns Botox. Trading for less than nine times forward earnings and with a 5.6% dividend, ABBV looks like a good bet for income investors who enter 2020 with few options as interest rates have yet again returned to record lows.
ABBV YTD return: -6.6%
S&P 500 YTD return: -15.3%
Historically speaking, the health care industry has performed well and has been steady in economic recessions. Amidst a pandemic and as companies race to cure COVID-19, the health care industry is attracting investors – and for good reason. DaVita, Novartis, and AbbVie are just three healthcare companies among many that are lucrative investments in 2020.
Opinions expressed by AsianBlurb contributors are their own.
Vincent Le is a pre-medical student at Georgia State University with an interest in surgery.
