Investors' fever for artificial intelligence stocks left other areas of the market looking sickly by comparison. One was health care, which was decidedly out of favor as 2025 began. A larger-than-normal amount of regulatory uncertainty weighed down pharmaceutical companies, insurers and most of the other players in the multitrillion-dollar U.S. health ecosystem.

As the AI fever broke and some of those regulatory concerns settled, health care stocks got healthier, if not fully robust.

"Valuations are still below historical levels," as the sector's recovery is in its early days, says Mike Perrone, a specialist in health care at investment firm Baird. In the meantime, investors are getting more comfortable that the firms are managing the risks of changing health care policies, he says.

The beginning of 2025, in the early months of the Trump administration, was marked by discomfort. The president's rhetoric on prescription-drug prices inspired fear among pharmaceutical companies, because their profits would be deeply damaged if the U.S. were to mandate European-style pricing for prescriptions.

It was also unclear how the new leadership of the Food and Drug Administration (FDA) would run the drug-approval process and whether new medicines could easily make it to market. Huge budget cuts at the National Institutes of Health threatened research programs that are major customers for medical supplies and tools. And the Trump tariff policy threatened health care firms that import or export.

As the year closed, however, most of the companies' worst nightmares hadn't come true. The major turning point was the "most-favored-nation" deal on pricing that the federal government struck with pharmaceutical giant Pfizer (PFE) in September. The deal exempted the firm from tariffs while reducing drug costs for Medicare and state health plans. The government made deals with more pharma companies after that.

"Investors viewed those deals to be pretty industry-friendly overall, relative to some of the fears that were out there," says Westfield Capital Management's Matt Renna, who manages the Harbor Health Care exchange-traded fund.

Health care stocks are on the mend

The change in mood was reflected in the State Street Health Care Select Sector SPDR ETF (XLV), a fund that jumped 5.6% in the first two days after the Pfizer announcement and is up 12% since September 29, the day before the Pfizer announcement.

Another bullish sign: The December initial public offering of equipment company Medline (MDLN) raised more than $6 billion, making it one of the biggest debuts of the past decade. The shares then jumped 40% on their first day of trading.

But the health care sector as a whole remains below its historical valuation, says Eddie Yoon, the health care sector lead at Fidelity Investments and the manager of the Fidelity Select Health Care fund, a member of the Kiplinger 25, the list of our favorite actively managed no-load mutual funds. Some health care subsectors are pricier than others, he says.

Health care providers — think companies that own hospitals — and equipment distributors are closer to the upper end of their historical valuation ranges. Health insurance companies are near the lower end, because profits have been dinged by costs that rose faster than the companies could increase their premiums.

Biotech stocks have been strong performers, in part because investors see a wave of mergers-and-acquisitions activity coming. The strength in biotech has helped pull up the stocks of companies in the life-sciences tools sector, many of which had stumbled post-pandemic, Yoon says.

Within that varied landscape, we found a handful of health care stocks that are poised for gains as the sector overall recovers its health. Prices, yields and other data are as of December 31, unless otherwise stated.

Boston Scientific

Boston Scientific (BSX) makes devices that treat gastrointestinal and urological conditions, but it's the cardiology business that's at the heart of its growth story.

The company's Watchman has long been a leading product for what's called left atrial appendage closure, a procedure that blocks blood clots and minimizes the risk of strokes. BSX's products also serve the market for cardiac ablation, in which a catheter uses heat or cold to create scars and treat arrhythmia.

Now, the company's Farapulse product is a leader in a new technique: pulsed-field ablation, which works faster and causes less damage to the heart than conventional ablation.

The firm's cardiology division, which accounts for about two-thirds of its sales, posted a sales gain of 22% in the quarter that ended September 30. All told, Boston Scientific's top line rose by more than 20%, to $5.1 billion, with profits up about 60%.

Those are impressive results considering the firm's tough competition: Medtronic (MDT) — another pioneer in pulsed-field ablation — Stryker (SYK), Johnson & Johnson (JNJ) and Abbott Laboratories (ABT) are all jockeying to sell their wares to medical providers.

Nonetheless, analyst Joshua Jennings of investment firm TD Cowen says Boston Scientific is his top recommendation for 2026 and "the most attractive growth story in the medical devices sector."

He believes the company can continue to report double-digit sales and earnings growth while expanding profit margins. Farapulse and Watchman "should remain needle-moving product drivers" in 2026, says Jennings, who sees the shares increasing 21% over the next 12 months.

The stock trades at 29 times estimated earnings for the next 12 months, which is slightly above the average of 25 for the S&P 500's health care equipment and supplies industry, according to S&P Global Market Intelligence.

CVS Health

A former CEO of CVS Health (CVS) said the drugstore chain's name stood for "convenience, value and service." Investors have had trouble looking beyond the firm's 9,000-odd retail locations, but they're beginning to see that the company has a three-part business that can deliver on the motto.

In addition to those stores, CVS owns Aetna, a giant of the health insurance industry, and CVS Caremark, a company that manages pharmacy benefits for insurers. CVS added a chain of private medical clinics in 2023 with hopes of integrating the services into its retail chain.

Fitting those businesses together, CEO David Joyner said at an investor day in December 2025, means that a customer of both Aetna and Caremark who walks into a CVS store should get better health outcomes at a lower cost than if they'd gone elsewhere.

The combination of complementary businesses is a differentiator from the deeply distressed Walgreens, which saw its share price crumble before going private in 2025. Rite Aid was in worse shape, and it went out of business completely in 2025.

But CVS paid up for its acquisitions, and the company has had challenges putting everything together. Aetna had been a problem spot, with profit margins below its peers, but the insurer began to reverse that in 2025.

"We're betting on a turnaround," says Daniel Matviyenko, a managing director of Jennison, an investment division of PGIM, and manager of the PGIM Jennison Health Sciences Fund.

The fund started buying CVS shares in early 2025 and continued adding to its stake, making CVS a top-10 position as of mid-December. "We do think this promise of integrated health care is finally here, and CVS is leading the charge."

Investors are getting on board. CVS stock gained 84% in 2025 — but the shares are still cheap, at 12 times estimated earnings. For now, the V in CVS still stands for value.

Danaher

Danaher (DHR), a Washington, D.C.-based company, saw its business boom in the pandemic after its Cepheid subsidiary developed the first point-of-care test for COVID-19 to receive emergency-use authorization from the U.S. government. Per-share profits nearly doubled, to $9.66, from 2020 to 2022, and the stock price doubled as well.

Although COVID isn't gone, the world's attention has waned, and Danaher has retreated from its peaks. The stock is down about 30% from its pandemic highs. Danaher defenders say investors can now see the post-COVID prospects for the maker of diagnostic tools and devices — and they should like what they see.

Danaher has long been acquisitive, snapping up companies to take advantage of growing areas in health care, and selling off subsidiaries that no longer fit.

Analyst Sel Hardy, of research firm CFRA, says Danaher's portfolio "transformation" created a focused company that can accelerate its revenue growth rates and improve its profit margins. Hardy has a Buy rating on the stock and sees it hitting $258 in 12 months, implying a gain of 13% from its recent close.

Analyst Sidharth Sahoo, of investment firm HSBC, says Danaher management has set conservative sales-growth forecasts in the low single digits for 2026 that are appropriate, given the struggle of the company — and the entire life-sciences tools industry — to hit targets post-COVID. Sahoo sees the shares reaching $255 in the next 12 months.

But if the firm hits 6% sales growth (the high end of its forecast), Sahoo can see profit margins expanding, too, pushing earnings growth into double digits and sending shares close to $300.

Zoetis

Fighting like cats and dogs could soon become a thing of the past: Many pets are already on anti-anxiety medication, as their owners boost what they spend to keep their companion animals healthy and happy.

Zoetis (ZTS) is the biggest provider of the products that do it. Spun off from pharmaceutical giant Pfizer more than a decade ago, Zoetis is all animal. It sells nearly $10 billion worth of drugs for pets and livestock annually.

There are advantages to not making medicines for humans. There are no huge government insurance programs pushing for drug-cost cuts, so Zoetis has more pricing power than conventional pharmaceutical companies. And the drug-approval process for animals is faster than for humans, so Zoetis can bring its big sellers to market relatively quickly.

And the company says its pipeline of drugs is promising. Zoetis executives told investors in December it believes it has 12 "blockbuster" products — defined as $100 million or more in annual sales — in the works, including one debut per year from 2026 to 2029. The lineup includes treatments for chronic kidney disease, which Zoetis says is the number-one disease in cats and dogs yet has no products addressing it in the market today.

Zoetis shares went on sale in November after the company tweaked its 2025 revenue forecast (while leaving its profit targets intact). The shares fell 14% on the news, and the market seems to be waiting for the company's final 2025 earnings report before getting back in.

This has created a rare opportunity. Shares trade at 19 times earnings — a level Zoetis hasn't seen since 2014. A 6% hike in the dividend, announced in December, has pushed the stock's yield to 1.7%.

Navann Ty, an analyst for investment firm BNP Paribas, is one of Wall Street's bulls. Zoetis minimizes costs with efficient research-and-development processes, he says, and it's the best innovator among animal-drug companies.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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The top 25 stocks in the S&P 500 this year might be dominated by tech names taking off on the AI trade, but big-time market beaters can be found in the industrials and materials sectors, too.

First, a quick recap: A volatile spring sell-off (sparked by the "Liberation Day" tariff shock in April) couldn't stop the bull market from stampeding through 2025. Thanks to a strong outlook for corporate earnings and the continued frenzy about AI infrastructure spending, equities are set to end the year at record levels.

With a few days left of 2025, the S&P 500 has delivered a price gain of nearly 18% year to date, with Magnificent 7 stalwarts such as Alphabet (GOOGL) and Nvidia (NVDA) backstopping the cap-weighted benchmark's returns.

It should come as no surprise that the information technology and communication services sectors were the primary outperformers this year, rising 26% and 22%, respectively. The industrials sector, up 19%, also managed to beat the broader market.

A closer look at the individual names in the S&P 500 reveals that 12 of the 25 hottest stocks of 2025 were tech-related.

However, the rally has broadened significantly; five of the best-performing equities hail from the industrial stock sector, while financial stocks, materials stocks, health care stocks, utility stocks, consumer discretionary and consumer staples are all represented, too.

These were the hottest stocks of the year

What the hottest stocks of 2025 tell us

An interesting takeaway from this list is that the biggest beneficiaries of the AI trade weren't the hyperscalers. Instead, it was a collection of tech companies that design and manufacture the computer memory and storage products that live inside servers.

The ongoing build-out of AI data centers isn't just creating massive demand for specialized chips; it's also fueling a run on flash memory and high-capacity hard disk drives. That's why shares in SanDisk (SNDK), Western Digital (WDC) and Micron Technology (MU) posted the market's most explosive gains this year.

For example, SanDisk is the S&P 500 leader for 2025 with nearly a sixfold price gain. The company, which specializes in flash storage, was spun off from Western Digital in February 2025 and subsequently added to the S&P 500 in November.

Investors are bullish because higher-than-expected demand from AI data centers has allowed SNDK to raise prices and expand its profit margins.

Western Digital comes in second in price appreciation, as shares nearly quadrupled this year. By spinning off SanDisk to concentrate on its core competency in hard disk drives, the company became a "pure-play" favorite for investors. The market rewarded the move, viewing hard drives as a relatively stable, high-margin business compared with the more volatile and cyclical flash memory market.

Meanwhile, hyperscalers such as Amazon.com (AMZN), Alphabet (GOOGL) and Microsoft (MSFT) have a seemingly insatiable demand for WDC's high-capacity drives. As a pure-play hard drive manufacturer at the center of the AI boom, it's no wonder WDC had a fantastic year.

Which brings us to Micron Technology. One of the world's biggest memory chipmakers pivoted in 2025 to become a specialized provider for AI infrastructure. The market applauded rapturously, sending MU stock up almost 240%.

A company whose biggest customers include nearly every member of the Mag 7 — plus Advanced Micro Devices (AMD), among many others — is in an enviable position as an AI play. Like its peers, Micron enjoys significant pricing power due to overwhelming demand, allowing the company to post record-breaking revenue in its most recent quarter.

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Stocks are trading at record levels and valuations are stretched. While that by no means suggests the bull market has to end soon, it does make it harder to find names that industry analysts rate as bang-the-table buys.

True, the S&P 500 is pricey by a slew of metrics — but that's partly due to its market-cap-weighted construction. The Magnificent 7 stocks driving much of the bull run have a collective weighting of more than 30% in the benchmark index.

However, look at the equal-weight version of the index, in which every component accounts for 2%, and you'll see a more attractive picture.

While the S&P 500 gained nearly 40% since its early April bottom — and trades at more than 23 times forward earnings — the equal-weight S&P 500 is up a more modest 25% in the same span. As such, it trades at less than 18 times forward earnings.

That's not bad.

As the cliche goes: It's not a stock market; it's a market of stocks.

Meanwhile, third-quarter earnings season is underway, and the outlook for corporate profits, revenue and guidance is bright.

"Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above their 10-year averages," writes John Butters, senior earnings analyst at FactSet. "In addition, S&P 500 companies are reporting impressive numbers for revenues relative to analyst expectations and year-ago results."

Some of the strongest corporate profit margins since 2021 also helps explain why the market fetches its current multiple, notes DataTrek Research co-founder Nicholas Colas. "It also provides a pathway to even higher valuations," he adds.

Given this supportive backdrop for equities, we decided to suss out some of Wall Street's favorite stocks to buy now — and to see what the bull cases on these names looked like.

Targa Resources

Targa Resources (TRGP) is a top way to play a rebound in the midstream sector of the oil and gas industry. Analysts like the way it operates in nearly every segment of its industry and adore its geographic diversity.

When it comes to gathering, processing, transporting and storing natural gas and natural gas liquids (NGLs) in places such as the Anadarko and Permian Basins, analysts say Targa "overshadows" other energy companies.

"Expected completion of projects in the Permian and Delaware position Targa for further growth," writes Argus Research analyst John Staszak, who rates shares at Buy.

With shares down about 12% for the year to date, they look like a bargain. Analysts' average price target of $206.15 gives TRGP implied upside of about 33% in the next 12 months.

No wonder Argus has so much company in its bullish call. Of the 22 analysts covering TRGP surveyed by S&P Global Market Intelligence, 16 call it a Strong Buy, five say Buy, and one has it at Hold. That works out to a consensus recommendation of Strong Buy.

Take-Two Interactive Software

Video-game publisher Take-Two Interactive Software (TTWO) owns some of the strongest franchises in the massive industry. From Rockstar Games' Grand Theft Auto (GTA) series to NBA 2K from 2K Games, the company doesn't lack for lucrative hits.

Shares are up nearly 40% so far this year, but analysts say they have more room to run. All eyes are on the May 2026 release of Grand Theft Auto VI, which should be a major catalyst.

As important as GTA is to the company's fortunes, it's hardly a one-trick pony. TTWO releases a new edition of its NBA 2K game annually, while major franchises such as Red Dead Redemption, Borderlands and Civilization have historically helped it report beat-and-raise quarters.

That said, investors need to have confidence in the enduring popularity of GTA before they take the plunge into TTWO stock.

"Take-Two's prospects will always be more speculative than we'd prefer, as we think that it will always be dependent on developing the next massive hit," Morningstar notes.

Of the 27 analysts covering TTWO, 21 call it a Strong Buy, three have it at Buy, two rate it at Hold, and one has it at Strong Sell. That works out to a consensus recommendation of Strong Buy.

Boston Scientific

If you've ever undergone a minimally invasive medical procedure, chances are you've used something made by Boston Scientific (BSX). From stents and catheters to pacemakers and implantable defibrillators, BSX is critical to modern medicine.

Analysts say the company's strong pipeline, new product launches and additional acquisitions should continue to support revenue growth and margin expansion.

"BSX has a steady cadence of new product flow across its portfolio and is delivering above-industry growth, with particular outperformance over the past year-plus," notes Oppenheimer analyst Suraj Kalia, who rates shares at Outperform (the equivalent of Buy). "BSX is adding to the portfolio through tuck-in M&A and has several product tailwinds."

Shares are lagging the broader market by about 3 percentage points so far this year, but that just has them primed for outperformance, bulls say. Analysts' average price target of $126.14 gives BSX implied upside of about 25% in the next 12 months.

Of the 34 analysts covering BSX, 25 rate it at Strong Buy, seven say Buy, and two call it a Hold. That works out to a consensus recommendation of Strong Buy, and with high conviction to boot.

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President Trump's 870-page tax-and-spending bill is as big as advertised. Whether it is a beautiful bill from an investment standpoint is in the eye of the beholder. Like most new legislation, the One Big Beautiful Bill Act (OBBBA) has winners and losers.

A larger tax credit, a bigger tax deduction, a more sizable write-off, a less-onerous regulation, or a booster shot from increased government spending can lift profits for companies that benefit.

On the flip side, the end of a sizable subsidy, the phasing out of a tax break or major cuts to government programs can impair sales, resulting in earnings headwinds for negatively affected companies.

Below, we list some of the biggest investment beneficiaries of Trump's Big Beautiful Bill, and some of its victims, too. Prices and returns are as of July 31.

Play offense with defense

Trump's signature legislation delivered on his promise to spend more to strengthen the military. OBBBA increases defense spending by $150 billion, pushing the U.S. defense budget for fiscal year 2026 over $1 trillion, the largest in U.S. history.

A sizable chunk of the money will go toward priorities such as the Golden Dome missile defense shield. Other imperatives include building naval ships and developing next-generation munitions and unmanned drone weaponry, as well as replenishing weapons stockpiles.

Increased military spending by European allies and unstable geopolitics add to the case for the defense sector.

You don't have to be an army general to conclude that weapons-related companies have a tailwind. "The defense industry is an overwhelming winner," said Michael Arone, chief investment strategist at State Street Investment Management.

Investors looking to boost exposure to the defense sector can mimic a precision-guided smart bomb and try to pinpoint individual stocks, or they can take a cluster-bomb approach and gain access to a wider array of munitions makers through a diversified exchange-traded fund (ETF) that tracks the sector.

Aniket Ullal, head of ETF research and analytics at CFRA Research, likes the iShares U.S. Aerospace & Defense ETF (ITA), which is up 36% this year and holds about 40 stocks, including top holdings such as GE Aerospace (GE), RTX (RTX), Northrop Grumman (NOC) and Lockheed Martin (LMT).

Another option is the Invesco Aerospace & Defense ETF (PPA), up 27% in 2025. Holdings include top defense contractors plus tech stocks with Pentagon ties, such as Palantir (PLTR), a data analytics company that uses artificial intelligence to support military operations and intelligence gathering.

Huntington Ingalls Industries (HII), a leading shipbuilder that earns 80% of its revenue from the U.S. Navy, "stands to benefit from the Department of Defense's renewed focus on expanding the Navy's fleet size," says CFRA analyst Matthew Miller, who rates the stock a Buy.

Seth Meyer, global head of client portfolio management at Janus Henderson Investors, is bullish on Howmet Aerospace (HWM). Its specialized aircraft components get kudos for being lighter, faster, stronger and more cost-effective.

Howmet's parts helped land the Apollo spacecraft on the moon and are used in military aircraft, such as Lockheed Martin's drones and F-35 fighter jet. The stock is a top-10 holding in the Janus Henderson Forty and Janus Henderson Contrarian funds.

Surf the reshoring wave

It's no secret that Trump wants companies to build their products on U.S. soil. The OBBBA offers tax incentives for firms to embrace the "Made in America" policy. "The bill is incentivizing behavior change," says Meyer.

Growth-friendly OBBBA provisions include making permanent a 100% bonus depreciation — a type of tax break that allows companies to deduct a percentage of the purchase price of eligible assets.

Companies can now deduct the entire cost (up from 40% previously) of qualifying property, such as machinery and equipment, in the year it's put into service — no need to spread deductions over multiple years and wait to realize the tax benefits.

The new law also allows full expensing of domestic research-and-development expenses in the year they occur, cutting corporate tax bills and boosting cash flow.

Another perk aimed at encouraging investment in the homeland is 100% expensing, or immediate deductions, for certain manufacturing spending, such as upgrades to factories or assembly lines.

Manufacturing and heavy-machinery businesses such as Deere (DE) and Caterpillar (CAT) will benefit if customers spend more on capital equipment due to savings on taxes, says Paul Stanley, chief investment officer at Granite Bay Wealth Management.

"If I need a new tractor, I'm going to invest while I know [the tax breaks] are on the books," he says. For broad exposure to the industrials sector, Stanley likes the iShares U.S. Industrials ETF (IYJ), a fund that owns about 200 stocks.

Among individual stocks, consider Trane Technologies (TT), best known for its energy-efficient HVAC systems, says Eric Teal, chief investment officer at Comerica Wealth Management.

Trane is likely to see higher demand from customers with more cash to plow into their business thanks to the OBBBA tax breaks, Teal says. Another plus: Trane has limited tariff risk, says Morningstar analyst Brian Bernard. (Trane is a member of the Kiplinger ESG 20, our favorite stocks and funds with an environmental, social or governance focus.)

Vulcan Materials (VMC), a producer of construction materials such as crushed stone, sand, gravel, asphalt and concrete, is a top pick of Sandy Villere, portfolio manager at wealth management firm Villere & Co. "There's going to be a big tailwind with all the incentives for U.S. manufacturing," he says.

Catch the AI train

The new law is a potential accelerant for the already fast-growing artificial intelligence business.

"Getting semiconductor production on-shore is a key strategic focus of the Trump 2.0 administration," says Meyer. The OBBBA gives semiconductor makers incentives to break ground before 2026 on new plants to build high-powered chips.

The carrot? Boosting the tax credit to 35% from 25%.

Capital Group portfolio manager Matt Hochstetler says tech stocks that can benefit include Micron Technology (MU) and Taiwan Semiconductor Manufacturing (TSM). (The latter is liable for U.S. corporate taxes and qualifies for the credit.)

There will be losers

Trump is not a big backer of clean energy. The OBBBA's December 31 phase-out of the tax credit allowing homeowners to deduct 30% of the cost of installing solar panels from federal taxes could lead to a 20% to 30% drop in home solar installations, denting the sales of U.S. solar panel makers, according to CPA firm Cerini & Associates.

And the end of the $7,500 tax credit on September 30 for the purchase of a new electric vehicle will cut into EV sales.

Sizable cuts to Medicaid are a negative for hospitals that treat low-income patients. Such hospitals may face lower revenues due to fewer patients, and they risk not getting paid by patients who lose coverage. The cuts will also harm health insurers that derive a large chunk of their revenue from Medicaid plans.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Vanguard Health Care (VGHAX) has a new manager, Rebecca Sykes. Well, maybe not so new. Sykes, who started with the fund as an analyst in 2007, joined Jean Hynes as comanager in 2023.

But at the start of 2025, Hynes stepped away from the fund — though she’ll stay on as chief executive of Wellington Management, the fund’s subadviser, a position she’s held since early 2021. “The change is part of a thoughtful, long-term succession plan,” a Vanguard spokesman said.

Health Care, which has $40.5 billion in assets, is the big kahuna of its category, so Sykes’s new role as sole manager — the third in the fund’s 40-year history — is noteworthy.

Challenges lie ahead. Although Health Care had the best 30-year annualized record of any U.S. stock mutual fund at the end of 2016, it has had uneven returns of late, and its 10-year annualized return now ranks below average.

Health Care Fund strategy

We’ll be watching the fund closely. Every new manager makes their mark on a fund, even if they’re well schooled in the previous manager’s ways. That said, Sykes says she will carry on the firm’s research-driven, team-focused and collaborative approach. And like Hynes, she will focus on undervalued companies of all sizes all over the world (non-U.S. stocks make up 27% of the fund’s portfolio) that are poised to play key roles in the future of medicine and healthcare.

“I believe innovation will continue to drive value over the long term,” says Sykes.

The fund typically balances hefty stakes in the managers’ highest-conviction stocks with smaller holdings in baskets of stocks to gain exposure to specific subsectors or themes. Top holding Eli Lilly (LLY), for instance, represents almost 10% of the fund’s assets.

But in 2024, with biotech shares languishing, the fund initiated new stakes in five biotech firms, including Avidity Biosciences and Crinetics Pharmaceuticals.

Help for healthcare stocks

Sykes says she’s excited about the future of healthcare. Clarity on the new administration’s policy on drug pricing, vaccines and government insurance programs could “help lift healthcare stocks,” she says. And new data for medicine to treat obesity, high cholesterol and lung cancer could “advance the standards of care and help reinvigorate the performance of biotech stocks.”

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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Genetic analysis company 23andMe (ME) announced this week it's declaring bankruptcy and pursuing a sale, leading many customers to pursue deleting their data from the company.

23andMe was founded in 2006 and became something of a frenzy as customers willingly spit into tubes to find out origins of their ancestry. 23andMe wanted to be more than merely a family history lesson, though: The company also sought health insights for customers, using genetic analysis to test for certain predipositions, inherited traits and possible genetic disorders and indicators. It went public via a SPAC in 2021.

Through the years, there have been concerns for user privacy over a variety of issues, ranging from how the company would use your genetic information to if law enforcement would have access to it to the implications of run-of-the-mill data breaches. Now that the company is looking for a buyer, those concerns are coming to a head again as users consider what the next owner might do with their data.

How to delete your information from 23andMe

California Attorney General Rob Bonta put out a statement last week calling on 23andMe customers to delete their data "due to the trove of sensitive consumer data 23andMe has amassed."

The components stored by 23andMe include the ancestry and health reports as well as the saliva samples themselves. Your information can also be used by 23andMe for research — so that's another risk factor you have to mitigate.

These are the steps to delete your genetic information from 23andMe:

1. Log into 23andMe
2. Go to "Settings" (on a computer, you find "Settings" by clicking your initials in the top right)
3. Scroll all the way down to "23andMe Data" on the "Settings" page and hit "View"
4. Enter your date of birth
5. You have the option on this page to download your data in various fields. If you want to maintain it personally, go ahead and download the data, following the buttons on the page
6. After you've downloaded data to your wishes, scroll all the way down to the "Permanently Delete Data" button and select that

Note that if you requested any downloads of data reports that aren't immediately available (some take time to process), requesting to delete your data will stop those requests. So only delete your data after you have downloaded everything you want to keep.

After you request to delete your data, you will get an email to confirm the request. Click that link to confirm you want to delete your data.

Then, remember, you also have to request to destroy your saliva sample. Here are the steps to destroy your 23andMe saliva sample:

1. Go to the "Settings" page on 23andMe's website
2. Scroll down to "Preferences" and find "Sample storage"
3. If it says "You have selected to store your samples," click "Edit" in the top right of the "Preferences" box
4. Select "Permanently discard samples"
5. You'll see a green checkmark indicating your preferences have been updated

Lastly, look at if your data is being used for research. If you do not want your data used for research, here's how you address it:

1. Go to the "Settings" page on 23andMe's website
2. Scroll down to "Research and Product Consents"
3. If it indicates you've allowed your data to be used for research, click "Edit" in the top right of this box
4. Select "Change consent" as appropriate
5. For each option, you'll have to scroll down and check the box indicating "I am this person, I have read this document, and I DON'T GIVE CONSENT."

How else can you keep your 23andMe data safe?

Like any other service you log into and provide information to, 23andMe presents privacy risks that can be helped with basic safety measures.

For example, use a password manager like 1Password or NordPass to select smart passwords, use different passwords for each account, and change your passwords frequently.

With all the changes in the air for 23andMe, you should also be on the lookout for scams. Do not click on any links in texts or emails purporting to be from the company and asking you to provide information or payment. Go directly to the website, app or customer service yourself if you need to manage anything.

23andMe is "unique" in "the scale of how much highly sensitive data" it has, Suzanne Bernstein, counsel at the nonprofit Electronic Privacy Information Center, told NPR, making the protection of user data a bit murky, legally speaking.

Because of that, Bernstein said, she recommends taking the steps to delete your data "and advocating to your state and federal representatives to pass strong consumer privacy laws."

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It's no secret the market looks pricey by historical measures, but that doesn't mean there are no Buy-rated bargain stocks to buy.

We're all more than aware that the S&P 500 is trading at lofty valuations by a number of measures. How often have we been told that the market's forward price-to-earnings ratio (P/E) – the S&P 500 currently trades at 22 times next-12-months earnings – is perilously close to its historical high?

Indeed, as Savita Subramanian, head of U.S. equity strategy and U.S. quantitative strategy at BofA Global Research, notes: "On 19 of 20 metrics, the S&P 500 is trading at statistically expensive levels."

But that doesn't mean there are no bargains to be found. After all, as the cliche goes, it's not a stock market; it's a market of stocks.

To that end, we screened the S&P 500 for the best bargain stocks to buy, according to industry analysts. We sussed out high-quality names with cheap share prices on a relative valuation basis. We further limited ourselves to stocks scoring a rare consensus Strong Buy recommendation, according to data from S&P Global Market Intelligence.

We then dug into analyst research and recent returns to find three of the most promising names, which might surprise you. Tech and communication services stocks may get all the attention, but there's value to be found in the consumer discretionary, energy and materials sectors.

Hasbro

• Market cap: $11.6 billion
• Dividend yield: 3.4%
• Forward P/E: 15.8

Hasbro (HAS) has become something of a poster company for weathering trade shocks. The toymaker not only manufactures a significant portion of its products in China, but the Middle Kingdom is also a major market. Indeed, Hasbro recorded more than $1 billion in non-cash goodwill impairment charges this year due to the impact of tariffs.

And yet, shares have shaken off the shock, gaining more than 50% so far in 2025. Even better, analysts say Hasbro's valuation remains compelling, suggesting even more upside ahead.

"The company has consistently delivered on earnings and has topped estimates for the past seven quarters," notes Argus Research analyst Christine Dooley, who rates HAS stock at Buy. "It delivered again this quarter despite retailers delaying orders due to tariffs and economic uncertainty. The business is on track and fundamentals are good."

HAS stock goes for less than 16 times expected earnings – below its own five-year average P/E, and at a roughly 30% discount to the broader market, according to LSEG Stock Reports Plus. In addition to looking like a bargain, HAS offers an attractive dividend with an implied yield of 3.4%.

Of the 14 analysts covering the stock surveyed by S&P Global Market Intelligence, 10 rate it at Strong Buy, two call it a Buy and two have it at Hold. That works out to a consensus recommendation of Strong Buy.

SLB

• Market cap: $53.3 billion
• Dividend yield: 3.2%
• Forward P/E: 12.5

Bulls say SLB (SLB), the oilfield services giant formerly known as Schlumberger, has a unique ability to ride out subdued industrywide demand. True, shares are off about 5% so far this year, but that only makes the valuation more compelling.

Thanks to its $7.8 billion acquisition of ChampionX in July, and its diversification into offering digital services and data centers, SLB should be able to "navigate the environment until spending ramps back up," writes Susquehanna analyst Charles Minervino, who rates shares at Positive (the equivalent of Buy).

Accelerating international markets and pricing momentum provide upcoming catalysts to the energy stock, the analyst notes.

Meanwhile, SLB's price appears to be right. With a forward P/E of 12, SLB trades at a 25% discount to its own five-year average, as well as a discount of almost 50% to the broader market.

By price-to-sales, SLB trades at even steeper discounts to those benchmarks.

Then there's all the cash SLB is returning to shareholders. The company reaffirmed its plan to spend $4 billion on share repurchases and dividends in 2025, up from $3.27 billion in 2024.

Of the 30 analysts covering SLB, 19 call it a Strong Buy, nine say Buy and two have it at Hold. That translates to a consensus recommendation of Strong Buy.

Smurfit WestRock

• Market cap: $18.7 billion
• Dividend yield: 4.8%
• Forward P/E: 10.7

Smurfit WestRock (SW) shares have lost about a third of their value so far this year, but bulls argue that this leaves them trading at bargain-basement prices. After all, the company is still finding its feet.

SW was formed by the 2024 merger of Smurfit Kappa and WestRock Company, creating the world's largest paper packaging company. Smurfit WestRock's operations in 40 countries make it the revenue leader in the world of corrugated cardboard, containerboard, consumer packaging and more.

"We rate SW at Buy given its leading industry position in North American containerboard, allowing it to capitalize on the improving containerboard cycle, which we believe is entering a 'golden age' driven by balanced supply and demand," writes Truist Securities analyst Michael Roxland.

Moreover, SW expects $400 million in synergies (also known as cost cuts) as a result of the merger.

With a forward P/E of less than 11, SW trades at an 11% discount to its own five-year average, according to LSEG Stock Reports Plus. That valuation also represents a discount of 50% to the broader market. The dividend yield, at 4.8%, is pretty spicy compared to the S&P 500's yield of 1.2%.

Of the 16 analysts covering the materials stock, 11 rate it at Strong Buy and five have it at Buy. That works out to a consensus recommendation of Strong Buy.

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Berkshire Hathaway (BRK.B) was once again a net seller of stocks in its most recent quarter. But if you think Warren Buffett, who will step down as CEO at the end of 2025, has caught the "AI is a bubble" bug, think again.

The Oracle of Omaha has been easing off equities and hoarding cash for quite a while. In the past three years, Berkshire was a net seller of stocks to the tune of $190 billion. Also noteworthy is that Berkshire hasn't engaged in stock buybacks since May 2024.

As a result, Buffett is running a sort of "barbell" portfolio. Berkshire, with a market cap of more than $1 trillion, holds $280 billion in stocks and a whopping $380 billion in cash.

Berkshire's cash pile has been boosted by comparatively high short-term interest rates, as well from pruning its portfolio. Buffett once again pared BRK.B's stakes in major long-term holdings such as Apple (AAPL), Bank of America (BAC) in the most recent quarter.

The Apple sales are particularly noteworthy. Not too long ago, the iPhone maker accounted for roughly 40% of Berkshire U.S. equity portfolio. Today, it's closer to 23%.

For some folks, these are highly disquieting developments. When one of the greatest investors of all time is selling massive amounts of stock in some of his favorite names, it's understandable if people believe they would feel better about it if only they knew why.

First things first, however. Buffett took pains to explain to Berkshire shareholders at their annual meeting in May that the iPhone maker is still, er, the Apple of his eye. (It would have been embarrassing not to, considering Apple CEO Tim Cook attended the event in person.)

If Buffett has a problem with AAPL, it's that the value of Berkshire's stake has grown tremendously at a time when he expects corporate tax rates to rise, probably sometime in the not-too-distant future.

As Buffett told the Berkshire faithful in August 2024: "If I'm looking at a 21% rate this year and then we're [paying] a lot higher percentage later on, I don't think you'll actually mind the fact later on that we sold a little Apple this year."

Perhaps the same thinking informed Berkshire's paring of its stake in Bank of America. The fact that owning more than 10% of a publicly traded company's shares triggers disclosure requirements large shareholders would rather avoid for as long as possible is another reason to bring one's ownership below a regulatory threshold.

What we know is that Buffett has been a net seller of equities for 12 consecutive quarters. Share repurchases have ground to a halt, too. For context, Berkshire repurchased more than $9 billion worth of BRK.B stock in all of 2023.

This is not the sort of behavior one typically sees in someone with excessive confidence in equity prices.

What gives?

Buffett stocks sales: An expert's take

If Warren Buffett is selling stocks and not buying back his own, that might tell us something about the Oracle of Omaha's view of the market, writes Nicholas Colas, co-founder with Jessica Rabe of DataTrek Research.

As a multidecade market watcher and market participant, Colas posits three potential explanations for Buffett's "unusual activity."

The first explanation is that Buffett is calling a top. "Buffett sees stocks as overvalued, including his own, and therefore susceptible to a deep correction or outright bear market," Colas writes.

It's interesting that Berkshire holds $380 billion in cash. "That’s a lot of firepower if markets see a sustained drop," notes Colas. "While Berkshire is not especially expensive, its multiple may be worrisome to a value investor."

Don't forget that Buffett likes nothing more than to be greedy when others are fearful. If stocks crash, Berkshire will be able to go shopping for assets at deep discount prices.

M&A on tap

Then there's the possibility that Berkshire is amassing cash to effect a truly whale-sized deal. "Berkshire may have identified one or more large acquisitions and is raising capital for those purchases," Colas writes. He adds that BRK.B's $380 billion in cash would comfortably buy all of Coca-Cola (KO) or Goldman Sachs (GS).

Colas emphasizes that the latter two are only examples, not risk arbitrage trading ideas. They do make sense, however. Coca-Cola, a Buy-rated Dow Jones stock, has been a core Berkshire holding for four decades.

As for Goldman Sachs, Berkshire has been a major shareholder in the past. (Recall that Buffett gave GS an injection of capital during the Great Financial Crisis.)

Passing the baton

Lastly, Colas postulates that it's possible Buffett is simply preparing the company for his departure as CEO. (He will stay on as chairman.)

Perhaps Buffett "wants to clear the decks for his successors to remake Berkshire's portfolio and rethink the company's stock repurchase program," Colas says.

"At 95 years old, he has certainly earned the right to ride off into the sunset as one of the greatest investors of all time."

The bottom line

The most important takeaway from Colas' note: "We wouldn't read too much into Buffett's latest moves since there is more than one logical explanation for his actions."

Let's pause on that for a moment, because it's important. As folks have noted before, if copying Warren Buffett's buys and sells was all it took to become the next Warren Buffett, there would be a lot more Warren Buffetts in the world.

As far as we know, there is still only one.

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Whether you like it or not, members of Congress are allowed to buy and sell stocks. True, federal law prohibits them from using "nonpublic information derived from their official positions for personal benefit," and they're required to disclose their trades.

That said, it's understandable if folks don't quite trust politicians to be on the up and up when their personal fortunes might appear to be in tension with their duties as elected representatives.

Perhaps this is unfair; even cynical. But to modify a famous quote from Upton Sinclair, it's difficult to get a person to understand something when that person's salary depends upon the person not understanding it.

Take, for instance, the uproar around President Donald Trump, who said shortly before announcing a reversal on reciprocal tariffs that it "is a great time to buy stocks."

The reversal sparked a historic stock market rally and has some high-profile Democrats questioning if anyone in the Trump administration profited off the announcement.

Disclosure rules are supposed to help mitigate this problem. Thanks to these requirements, the public can follow what members of the House and Senate are doing with their investments.

Before we go further, please note that this activity shouldn't be used for trading purposes.

After all, insider buying and selling at publicly traded companies is voluminously disclosed and analyzed, but it doesn't really tell us much. That's because insiders – the executives and board members who know what's going on – can sell for any number of legitimate reasons, from paying tuition to portfolio diversification.

When it comes to stocks, insider buying is actually a more useful piece of information. And even then, it's not exactly a screaming buy signal.

Using insider activity among members of Congress as the basis for some kind of trading system is not a rigorous idea.

With those caveats out of the way, it is indeed interesting to see which stocks, bonds and private investments are most popular with members of the House and Senate. Perhaps more interesting is how certain pols churn their portfolios, which is to be avoided if you're a retail investor.

Have a look at the below table to see which politicians were the most active traders by volume over the past 90 days, according to data from Capitol Trades.

Stocks politicians are buying and selling

Look past the municipal debt and investments in limited liability companies, and you can see that pols are pretty normal when it comes to their buys. Top-rated Dow Jones stocks, mega-cap tech names and reliable and rising dividend-payers routinely make the list of our representatives favorite names.

Both sides of the aisle like many of the hottest stocks, including Apple (AAPL), Amazon.com (AMZN), Oracle (ORCL) and Broadcom (AVGO) these days – but then so does pretty much everyone else.

Interestingly, as much as Representative Ro Khanna (D-Calif.) is associated with tech investing, a number of his most recent biggest buys were stalwart blue chips such as JPMorgan Chase (JPM), the nation's biggest bank by assets, and Warren Buffett's Berkshire Hathaway (BRK.B).

Meanwhile, in addition to buying shares in speculative artificial intelligence (AI) firm BigBear.ai Holdings (BBAI), Representative Lisa McClain (R.-Mich.) also picked up Air Products and Chemicals (APD), which happens to be one the best dividend stocks for reliable dividend growth.

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Warren Buffett's Berkshire Hathaway (BRK.B) initiated small positions in Ulta Beauty (ULTA) and Heico (HEI) in the second quarter, bought more Chubb (CB), pared stakes in eight names – most notably, Apple (AAPL) and Chevron (CVX) – and exited bets on Paramount (PARA) and Snowflake (SNOW).

There were other moves, as well, but the biggest news to come out of Berkshire's latest regulatory filing was already known. Buffett slashed Berkshire's stake in Apple by almost half. As previously reported, the holding company also reduced its exposure to top holdings such as Chevron and Bank of America (BAC).

Keep in mind that Buffett told Berkshire shareholders that the Apple sales were done for tax purposes, as he expects corporate tax rates to rise sometime in the not-too-distant future. The same thinking could apply to BRK.B's other sales, but then it's not unusual for Buffett to be a net seller of equities when stocks are trading at record levels.

All told, Berkshire sold roughly $77 billion in equities in Q2 – mostly Apple – and purchased less than $2 billion. At any rate, with exactly 400 million Apple shares still in the portfolio, Buffett would appear to be done selling his favorite stock.

Earlier this year, the greatest long-term investor of all time said AAPL is "even better" than American Express (AXP) or Coca-Cola (KO), two "wonderful" businesses that Berkshire has owned since the early 1960s and late 1980s, respectively.

Perhaps it's a coincidence, but Berkshire now holds 400 million AAPL shares – or the exact same number of shares it has held in KO for decades. 

Before we detail Berkshire's quarterly buys and sells, it's important to know that Buffett has always maintained a highly concentrated portfolio. The top five holdings account for almost three-quarters of its U.S. equities portfolio value, while the top 10 account for more than 90%. 

As Buffett likes to say, diversification is for people who don't know what they're doing.

Stocks Warren Buffett is buying

Berkshire picked up two new stocks in Q2: Ulta Beauty and Heico. Berkshire bought 690,000 shares of Ulta Beauty worth $266 million at the end of the Q2. With a weight of 0.1% in the Berkshire Hathaway portfolio, or its 30th largest position, the cosmetics retail chain won't be moving the needle much on Berkshire's returns.

Meanwhile, with a weight of just 0.07%, Heico is even less material. Berkshire accumulated a little more than 1 million shares in the supplier to the aerospace industry. The stake was worth $185 million as of the end of Q2. 

The comparatively small size of the purchases could mean they were initiated by Buffett's co-portfolio managers Ted Weschler or Todd Combs.

On the other hand, one of the largest additions Berkshire made in Q2 was probably the work of Buffett himself. As previously disclosed, BRK.B bought another 7 million shares in Occidental Petroleum (OXY). (Buffett has added to OXY on weakness in the past.) The holding company owned 255 million shares worth $16 billion at the end of the quarter. At 5.8% of its portfolio, OXY is Berkshire's sixth largest holding.

In another interesting move, Buffett also added to Chubb, the insurance company Berkshire first picked up just a quarter ago. The holding company increased its stake by 4.3%, or more than 1 million shares. With roughly 27 million shares worth $6.9 billion at quarter's end, Chubb accounts for a hefty 2.5% of the portfolio, or Berkshire's ninth largest holding.

Elsewhere, Berkshire fiddled with some of its smallest positions, upping its bets on rather immaterial holdings such as Liberty Sirius XM Group, Series C (LSXMK) and Liberty Sirius XM Group, Series A (LSXMA). Note that the company cut its stakes in the tracking stocks last quarter. Berkshire also bought more Sirius XM Holdings (SIRI) – a position it reduced in Q1.

Stocks Warren Buffett is selling

As noted above, Apple accounted for almost all of Berkshire's Q2 sales. Other reductions included Chevron, a Buy-rated Dow Jones stock, which Buffett first purchased four years ago. In Q2, Berkshire cut CVX by 3.6%, or 4.4 million shares. With 119 million shares worth $18.6 billion at the end of the quarter, the integrated oil major is Berkshire's fifth largest holding.

Other sales included a more than 20% reduction in Capital One Financial (COF). Berkshire sold 2.7 million shares in the financial services company in Q2, bringing its position down to 9.8 million shares worth $1.4 billion. With a 0.49% weight in the portfolio, COF is Berkshire's 19th largest bet. 

Berkshire also continued to clean and prune a number of its mid-level equity holdings, paring its stakes in T-Mobile US (TMUS), Louisiana Pacific (LPX), Liberty Media (LLYVK), Liberty Media (LLYVA) and specialty retailer Floor & Decor (FND).

Buffett also closed out its stake in Paramount, dumping all 7.5 million shares. The company first bought PARA in early 2022. It didn't work out.

Lastly, Berkshire exited its position in Snowflake (SNOW), which is believed to have been the work of subaltern Todd Combs. Berkshire made a rare bet on an initial public offering (IPO) with Snowflake in the third quarter of 2020. SNOW has an all-time total return of negative 16%.

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Warren Buffett's Berkshire Hathaway (BRK.B) slashed its stake in Apple (AAPL) by almost half during the second quarter, further rattling a tech sector already under scrutiny over its massive spending on AI – and naturally unnerving some Apple shareholders, too.

After all, Apple stock has been the single largest position in the Berkshire Hathaway equity portfolio for years, typically carrying a weight in excess of 40%. And yet Buffett has been paring Berkshire's enormous Apple stake at an alarming rate in 2024.

He's also taken something off the top of Berkshire's second largest holding, Bank of America (BAC).

Buffett has said his preferred holding period is forever. It's also important to know that Buffett is not, and has never been, a market timer. Furthermore, he has had nothing but praise for Apple – calling it "Berkshire's third business" – and openly admires Bank of America CEO Brian Moynihan. 

So what's going on?

Stay tuned for churn

We won't get the full details of which stocks Warren Buffett bought and sold in the second quarter until Berkshire Hathaway discloses its changes in holdings after the market closes on August 14. 

What we do know now is that this isn't the first time Buffett has taken a big bite out of Berkshire's Apple stake this year. As we wrote at the time, BRK.B cut its position in AAPL by 13% in the first quarter. Keep in mind that Buffett was explicit that this was done for tax purposes: 

"Buffett took pains to explain to Berkshire shareholders at their annual meeting in Omaha on Saturday that the iPhone maker is still, er, the Apple of his eye. (It would have been embarrassing not to, considering Apple CEO Tim Cook attended the event in person.)"

If Buffett has a problem with AAPL, it's that the value of Berkshire's stake has grown tremendously at a time when he expects corporate tax rates to rise, probably sometime in the not-too-distant future. 

As Buffett told the Berkshire faithful: "If I'm looking at a 21% rate this year and then we're [paying] a lot higher percentage later on, I don't think you'll actually mind the fact later on that we sold a little Apple this year."

Buffett pointed out that Berkshire's corporate tax rate was 35% just a few years ago. Back in the late 1960s, it was more than 50%. This man has been around a long time. He knows tax policy is never written in stone.

Perhaps Buffett's calculus explains the thinking behind the BAC sales too. As with Apple, Berkshire has enjoyed outsized returns from its investment in Bank of America. Indeed, Buffett liked the bank so much that Berkshire received special regulatory approval to acquire more than 10% of its shares outstanding. That's commitment.

The bottom line is that whatever Buffett is up, it's actually sort of irrelevant. He is a professional capital allocator. It's his job to maximize the returns on the capital entrusted to him. You either trust Warren Buffett or you don't. If you don't trust him, fine. You're not going to hurt his feelings. His track record sort of speaks for itself.

More selling to come

If today's news bothered you, you might want to skip next Wednesday. That's because Berkshire Hathaway tends to be a net seller of equities when stocks are at record highs. 

The holding company sold $77 billion worth of stock in Q2, mostly Apple. But do not be surprised if we learn that Buffett & Co. trimmed or exited positions in any number of other holdings when Berkshire files its Form 13F with the Securities and Exchange Commission after markets close on August 14. 

Buffett has this funny habit of trying to buy stocks when they are selling at lower prices rather than higher prices. Stocks are pretty pricey these days. Buffett is selling. What's the mystery?

By the way, some folks might try to use Buffett's buys and sells as signals for what to do with their own portfolios. 

That would be silly. 

As noted above, Buffett is not a market timer. This is the man who wrote in The New York Times in October 2008 that he was buying stocks. The market didn't bottom until months later, in March 2009. 

"A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful," Buffett said. 

No, Buffett didn't bottom-tick the S&P 500's 50% collapse. The market fell another 28% from the time he penned that op-ed to equities' nadir. And all Buffett did was buy shares in great companies at cheaper and cheaper prices, probably the entire way down. (Berkshire shareholders then benefited by riding those prices all the way back up.)

As much fun as it might be to see which stocks Warren Buffett is buying and selling, you cannot copy his moves and expect to get the same returns. There are a bunch of reasons for this, but let's keep it simple: Buffett has access to a massive pile of really cheap capital and you don't.

You're no Warren Buffett

Berkshire's timing could have been better. It didn't do market sentiment any favors by releasing its results ahead of a global rout in equities that was mostly sparked by what's happening to the Japanese yen. But that's not on Buffett.

Markets go down as well as up. Pullbacks are normal. "The average drawdown from peak-to-trough in a given year in the U.S. stock market going back to 1928 is -16.3%," notes Ben Carlson, director of institutional asset management at Ritholtz Wealth Management. "Since 1950, the S&P 500 has had an average drawdown of 13.6% over the course of a calendar year."

Volatility is the price of admission to the stock market. The greater the reward, the greater the risk. If you can't handle the equity risk premium, stick to bonds.

In the meantime, leave professional capital allocation to the pros. Word is Warren Buffett is pretty good at it.

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Investing in shrinking waistlines might not have the wow factor of other market obsessions. But a new class of weight-loss drugs that help people shed pounds without dieting or doing cardio looks like a game-changer. These next-generation pharmaceuticals enable obese and overweight people to lose 15% to 20% of their body weight. 

“This could be the biggest opportunity that we’ve ever seen in the pharma industry,” says Andy Acker, portfolio manager at Janus Henderson Investors. 

No doubt, weight-loss drugs are trending. Traders are comparing U.S. weight-loss drug innovator Eli Lilly to artificial intelligence chip frontrunner Nvidia. Denmark’s Novo Nordisk, thanks to its first-mover advantage in obesity drugs, is now Europe’s largest company by market value ($572 billion). TV ads pitching Novo’s first-to-market weight-loss drug Wegovy and Lilly’s challenger Zepbound are filling the airwaves. 

And the drugs’ impact could reach far beyond their target users. The success of these appetite-suppressing drugs and resulting health benefits for millions of people could create headwinds for shares of snack makers and packaged-food firms, as well as medical device makers that specialize in knee replacements, insulin pumps and sleep apnea machines. Although stocks in some of these areas have wobbled recently, a growing number of analysts say the long-term risks to other market sectors from weight-loss drugs are overblown. 

You may have heard of GLP-1 (glucagon-like peptide 1), Wall Street’s new buzzword. GLP-1s are the pharmaceutical equivalent of a successful crash diet. They are hormones responsible for the “incretin effect” that makes you feel more full and eat less. Currently, it’s a two-horse race between Novo and Lilly, the only players with GLP-1 drugs approved by the Food and Drug Administration to treat obesity in the U.S. (In 2005, the FDA approved this type of drug to fight type 2 diabetes but didn’t okay its use for weight loss until 2021.) 

In this story, we’ll highlight the future prospects of the Big Two and offer up a few more picks of worthy competitors whose shares could rise if they deliver the next breakthrough. “This is an arms race,” says Joshua Riegelhaupt, assistant portfolio manager of Baron Health Care Fund. 

High stakes, significant risks

The market opportunity is massive, as the use of weight-loss drugs to fight obesity is massively under-penetrated. More than four in 10 (42%) Americans are obese, according to the Centers for Disease Control and Prevention. But only 4 million Americans were using GLP-1 obesity drugs last year, or just 1% of the U.S. population, according to BofA Global Research. Usage is set to skyrocket. 

About 15 million obese U.S. patients (or nearly 5% of the population) will be on GLP-1 weight-loss prescriptions by the end of the decade, analysts at J.P. Morgan estimate. That projected jump in penetration is why the market for obesity drugs, which last year hit $6 billion, “could grow by more than 16 times, to $100 billion, by 2030,” according to an analysis by Goldman Sachs.

Investors should note that the current crop of weight-loss drugs aren’t perfect. There’s no guarantee that lofty growth projections for use of the drugs will be met. Drug safety is another risk. Side effects include nausea, diarrhea and stomach pain, and pounds tend to return when patients stop taking these drugs. 

First-to-market treatments Wegovy and Zepbound are administered by injection, which isn’t as easy for patients as ingesting a pill. Other headwinds include manufacturing constraints; cost (many people pay $1,000 or more out-of-pocket each month); and lack of coverage by health insurers, which makes weight-loss drugs cost-prohibitive and pressures sales.

Drug makers are working to improve existing formulations. That’s why investors are laser-focused on drug trial results, especially next-generation oral offerings. “What you want to look for is whether the drugs in the pipeline have better efficacy,” says Mike Perrone, a biotech analyst at investment firm Baird. “Do they have lower side effects? Are they making it easier for the patients to take the medicine?” 

Pfizer, for example, suffered a setback late last year when it stopped working on its twice-a-day oral drug due to bad side effects. Pfizer is moving forward with a once-a-day pill, but we think investors should hold off on the stock for now. We’ve also passed on companies with next-wave obesity drugs in very early stages of development or ones deemed farther away from market, such as Roche’s CT-996, also orally administered, and Zealand Pharma’s Dapiglutide. 

Valuations are another headache. Thanks to the success of Mounjaro (prescribed to diabetics to control blood sugar and weight) and excitement since the December launch of Zepbound (prescribed for weight loss), shares in Eli Lilly are up 99% over the past 12 months and trade at 63 times expected earnings. Novo has gained 55% and trades at a price-earnings ratio of 39. For context, the S&P 500 index gained 23% and has a P/E of 20. 

At this stage of the race, investors have options ranging from the two early leaders to established drug companies playing catch-up and smaller rivals hustling to develop their own best-in-class weight-loss drugs. Read on for more details. Prices and returns are through April 30, unless otherwise noted.

Eli Lilly (LLY)

There’s an advantage to getting out of the gate fast in a largely untapped market of this size, especially for companies with established pedigrees and manufacturing prowess like Lilly (LLY), says Lee Brown, global sector lead for health care at financial research firm Third Bridge. “Leadership entrenches success,” he says. 

As of mid March, Zepbound’s share of the GLP-1 weight-loss market in the U.S. was already 44%, according to Truist Securities, while the U.S. market share of Novo’s Wegovy had shrunk to 56%, down from 86% three months earlier.

Zepbound rang up $175.8 million in sales in the final seven weeks of 2023. And sales tripled to $517.4 million in the first quarter of 2024. Together, sales of Zepbound and Mounjaro in the first quarter accounted for 26% of Lilly’s $8.8 billion in revenues. BofA analyst Geoff Meacham, whose 12-month price target of $1,000 per share for Lilly is the highest on Wall Street (implying a 28% gain), says annual sales of its GLP-1 drugs could top $60 billion by 2030. That’s nearly double Lilly’s 2023 company-wide sales of $34.1 billion. 

Lilly can cement its dominant position by bringing its oral weight-loss drug, Orforglipron, to the market before rivals launch their versions. It is now in its final Phase III trial, with results expected next year. BofA expects approval in 2026 and sees sales from Lilly’s full suite of obesity drugs growing from $1.5 billion in 2026 to $32 billion in 2035. 

Given the stock’s high valuation, investors might benefit from buying on dips. “Some of the good news is priced in, but I think there’s a long way to go,” says Neal Kaufman, lead manager of Baron Health Care Fund, which counts Lilly as its top holding. 

Novo Nordisk (NVO)

Being first to market doesn’t mean you’ll stay on top, but it does set you up for long-term success. Novo’s (NVO) popular GLP-1 diabetes drug Ozempic, which many people take to lose weight, has been on pharmacy shelves since 2017. 

Its weight-loss-focused cousin Wegovy was cleared for use by the FDA in 2021. And as GLP-1 drugs branch out into other medical uses, such as reducing cardiovascular and stroke risk, minimizing kidney disease, or easing symptoms of sleep apnea, leaders like Novo will continue to benefit, says Janus Henderson’s Acker, whose Global Life Sciences Fund counts Lilly and Novo among its top three holdings. In March, the FDA approved Wegovy as the first therapy to help people both manage their weight and reduce the risk of a heart attack. “These drugs are in their infancy, and their benefits go beyond just weight loss,” says Acker. 

Novo has oral weight-loss pills in its pipeline, such as Rybelsus (already approved to treat type 2 diabetes) and Amycretin, that it’s working to bring to market. “The next leg of competition [is all about] the search for ‘Wegovy in a pill,’ ” said Sachin Jain, an analyst at BofA, which rates the stock a “buy.”

In 2023, according to Novo, more than 40 million people were benefiting from both its obesity and diabetes treatments. To boost production of Wegovy in the U.S., the company acquired three manufacturing sites in New Jersey earlier this year. Keeping up with demand is key, as sales aren’t expected to slow. 

Last year, sales of Wegovy to treat obesity totaled $4.5 billion, according to Third Bridge. This year, Wall Street analysts expect Wegovy revenue to nearly double, to $8.8 billion. Novo increased overall sales at a 31% clip last year and sees revenue climbing another 18% to 26% this year. The stock is also a member of the Kiplinger ESG 20, our picks of companies with solid business fundamentals and environmental, social or corporate governance strengths.

Amgen (AMGN)

The biotech giant has a promising experimental obesity drug in its pipeline. MariTide, or AMG 133, first unveiled in late 2022, is now in Phase II trials. Amgen (AMGN) said its plans for a Phase III trial remains on track. 

And analysts say it could prove to be a better mousetrap than Wegovy or Zepbound. Early study results show Amgen’s injectable drug can reduce body weight by up to 15%, can keep the pounds off longer and has an acceptable safety profile. One way it separates itself from the competition is that it may need to be taken once a month (or even less frequently). 

“The key selling point so far is the longer dosing  interval,” says Morningstar analyst Damien Conover. That gives AMG 133 an edge over existing obesity drugs and those in the pipeline that are taken daily or weekly and require patients to keep taking the meds to keep the weight off. 

If AMG 133 makes it to market, it could provide a sizable boost to Amgen’s annual revenue growth, which is now in the mid-single-digit percentage range. “A successful obesity drug could move growth into double-digit territory,” says Morningstar analyst Karen Andersen. Amgen shares offer investors a cheaper way to play the weight-loss trend, with a bargain P/E of under 15.

Viking Therapeutics (VKTX)

Investors with a high tolerance for risk might explore stock in this small biotech company, which has a market value of less than $9 billion. Viking (VKTX) made headlines in February when its stock rose 121% in a single day after Phase II results of the company’s experimental weight-loss drug VK2735 exceeded investor expectations. 

Analyst Andy Hsieh, at investment firm William Blair, believes the development-stage biotech’s promising drug could deliver better results than Lilly’s Zepbound. Viking, Hsieh hinted, might also be a prime takeover target (which could further boost the stock’s upside potential). “Ultimately, we believe the value of VK2735 will be maximized in the hands of a big pharma,” Hsieh said. Viking also has an oral version of VK2735 in early trials.

All 11 analysts who cover Viking, which has yet to turn a profit, rate it “buy” or “outperform.” Analysts at Oppenheimer, who have a price target of $138 on the stock for the next 12 to 18 months (the highest estimate on Wall Street), say VK2735 has best-in-class potential and an 80% probability of success as a commercial drug. 

The firm forecasts that annual global sales of VK2735 will reach $11.7 billion in 2040. Oppenheimer analysts say shares, despite a 328% gain so far this year, have more room to run. 

Structure Therapeutics (GPCR)

Another dark horse in the race to bring an oral weight-loss drug to market is Structure Therapeutics (GPCR), which has a market value of less than $2 billion. Neal Kaufman, of Baron Health, initiated a small position in the stock in late 2023. 

He was intrigued by the potential of the company’s obesity drug GSBR-1290, which patients can take orally once a day. “It’s still in its early phase of development, but there is reason to think it can be successful,” says Kaufman. “It has the potential to be among the leaders in the category.” 

Getting an oral drug approved, Kaufman said, is the gateway to growth, noting that oral drugs are also cheaper and easier to manufacture than injectables. Baron ranks Structure second behind Lilly in the race to get a weight-loss pill to market. Structure is also a takeover target if GSBR-1290’s trial results continue to impress. 

“It’s probably more of a question of when, not if,” said Kaufman. All eight Wall Street analysts who cover the stock rate it a “buy.” If their median price target of $83 is right, the speculative stock could double from here.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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During its first-quarter earnings report this spring, Philips, the health technology company, announced it agreed to pay $1.1 billion in a settlement over respiration and sleep apnea machines. This is the latest action over the machines, which were recalled in 2021. 

The 2021 recall was mostly around DreamStation CPAP machines due to problems with "sound abatement foam" used in them, per the company's recall letter. The foam "may degrade into particles which may enter the device's air pathway and be ingested or inhaled by the user," and "may off-gas certain chemicals," according to the letter. 

Now, as of late April, the company has taken the step of agreeing to a settlement, in the wake of the recall and consumer lawsuits. Former users of the products can sign up for the settlement, if they weren't already part of the lawsuits. The company says: "Philips and Philips Respironics do not admit any fault or liability, or that any injuries were caused by Respironics' devices." 

Here's what you need to know about it, whether you're a product user or an investor.

What CPAP users should know about the settlement

The Philips settlement money will be for "users of the now-recalled CPAP and other respiratory devices who suffer from significant physical injuries," attorneys told NPR, as well as towards funding research to treat those injuries. 

Since the massive 2021 recall, many people have already come forward as part of the litigation. Philips said about 58,000 people have already filed claims or registered, and the company does not expect many more people to join since the litigation has been ongoing widely for some time now. 

People eligible to be part of the settlement, though, will still have to sign up for it, even if they were part of a case already. Philips said people will have six months from the date of the settlement to sign up for it, and the payment amount "is capped regardless of number of participants" — so how much you would get depends on how many people sign up.  

If you are one of those eligible individuals, it will take some time for the payout. Philips expects to make payments in 2025.

There are still some logistical hurdles in this process, as the agreement has to be filed with a federal court in Pennsylvania, NPR reported. 

There is also another related class-action lawsuit Philips settled. That one was for about $445 million over economic loss, for people who bought certain machines. You can join that at the settlement website, for $100 for each recalled device if its returned by Aug. 9, 2024. 

What's next for Philips

Philips already agreed to stop selling sleep apnea machines in the U.S., as USA Today reported, until it meets a set of standards, in a settlement with the Food and Drug Administration (FDA). 

With this latest settlement, Philips says it will be funded from cash flow generation and that a 982 million Euro provision was recognized in the first quarter of 2024. 

The announcement appeared to bring relief to investors that the threat of costly litigation is now in the company's past, as the stock price (ticker PHG) shot up about 30% on April 29. The $1.1 billion price tag was well below expectations, CNBC reported, which also likely contributed to the investor response. 

In the spring earnings report, Philips reiterated an expected 3-5% sales growth for full year 2024 and announced an increased expected free cash flow to 0.9-1.1 billion Euros in 2024. 

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Have you ever noticed that equity investors can't have nice things? As miserable as we are when stocks are going down, we're even more unhappy when they're going up.

There's an empirical explanation for this psychological phenomenon. It's called "loss aversion." Humans are at the mercy of all sorts of cognitive biases, and one of the more perverse ones is that we experience far more pain from losing money than we experience pleasure from winning the same sum.

That's why when markets are rising, stocks are said to be climbing a wall of worry. The higher stocks climb, the more investor anxiety mounts. That's loss aversion at work.

Cut to today, with markets at record highs and valuations stretched by just about any metric you care to use, and it's only natural for investors to question if stocks are in a bubble.

Stocks never go up in a straight line, but that's pretty much what the S&P 500 did after bottoming out early last spring. From its April 7, 2025, intraday low to its close on December 31, the benchmark index was up 41.6% on a price basis. Such a torrid run has U.S. equities trading at some of their very priciest levels in history, according to BofA Securities.

As of December 31, on 18 of 20 metrics the S&P 500 was trading at statistically expensive levels, according to a note to clients from Savita Subramanian, head of U.S. equity strategy and U.S. quantitative strategy at BofA Global Research. Four of the metrics — Market Cap to GDP, Price to Book, Price to Operating Cash Flow and Enterprise Value to Sales were at record highs.

Is the stock market in a bubble? Here's how to tell

Happily, valuation is not a timing tool, as strategists take pains to point out. As Subramanian suggests, opportunities remain for investors willing to look for selective sector opportunities

Meanwhile, though questions remain about when and whether the Federal Reserve will cut interest rates amid a backdrop of broadening and accelerating profits, it's not hard to argue for a boom in earnings-per-share and GDP growth.

It's also possible that stocks have structurally re-rated to carrying richer valuations, as Subramanian noted earlier in 2025.

"The S&P 500 has changed significantly from the 80s, 90s and 2000s," explains Subramanian. "Perhaps we should anchor to today's multiples as the new normal rather than expecting mean reversion to a bygone era."

Perhaps most important, bubbles are as much of a psychological phenomenon as a financial one.

There's no substitute for experience on Wall Street, which is why it's always wise to listen to old hands when it comes to divining the market's machinations. Nicholas Colas, co-founder with Jessica Rabe of DataTrek Research, started working full-time on Wall Street in 1986. He lived through the October 1987 stock market crash and has witnessed every boom and bust up close ever since.

Colas has developed a three-point checklist for "spotting unhealthy, runaway markets." Here's a thumbnail version:

The market for initial public offerings gets frothy. Although the number of IPO announcements hit a multiyear high in the third quarter, the market for new issues has been subdued since it peaked in 2021. Higher interest rates and the availability of private-market funding remain headwinds.

"The good news is that history shows a rampant IPO market is a clear sign of a top," Colas notes. "We're nowhere close to that now."

Hallmark mergers and acquisitions (M&A) deals. "Exceptionally bad deals happen at the top, even if at the time they seem quite sensible," Colas writes. "M&A activity is ultimately a function of CEO/board confidence. Just like retail investors chasing hot IPOs at a market peak, senior managers fall prey to the same overconfidence that the good times will last forever."

Happily, M&A activity, while picking up, also remains under control. Through November 30, M&A volume was up 2% year over year in 2025, according to PwC.

A double is a bubble. Colas has a general rule to identify unsustainably high prices in a range of markets. Whenever the S&P 500 doubles in three years or less, stock prices decline shortly thereafter. The same is true about the Nasdaq Composite over any rolling one-year window going back to the early 1970s, notes Colas.

"A double is a sign of speculative excess because macro conditions are never so different that asset prices should rise 100% over a short period of time," Colas says. "Markets are reasonably good discounting mechanisms. When prices double, you know speculation — not fundamentals — are driving those gains."

Even the Nasdaq Composite, which is the frothiest equity market right now, is up "only" 20% over the past year.

Another tech bubble?

The remarkable bull market in equities was given fresh fuel by the Federal Reserve's jumbo interest rate cut in September 2024, but it's uncertain how much more fuel monetary policy can provide from here. Meanwhile, bubble anxiety centers around the AI companies, such as the Magnificent 7, that dominate the S&P 500 and Nasdaq-100.

Naturally, echoes of the bursting of the dot-com bubble are tat the op of anxious investors' minds.

"The introduction of transformative technologies typically attracts growing investor interest as well as significant capital and new competition," writes Peter Oppenheimer, chief global equity strategist and head of macro research Europe at Goldman Sachs. "As enthusiasm builds and stock prices increase, the sum of individual company valuations can overstate the total potential aggregate returns; often a bubble develops and bursts."

Oppenheimer notes the technology sector has generated 32% of the global equity return and 40% of the U.S. equity market return since 2010. This reflects stronger fundamentals rather than irrational exuberance.

"In our view, the technology sector is not in a bubble and is likely to continue to dominate returns," the strategist adds. That said, "concentration risks are high, and investors should look to diversify exposure to improve risk-adjusted returns while also gaining access to potential winners in smaller technology companies and other parts of the market."

Are stocks in a bubble?

None of Colas' time-proven indicators point to a stock market bubble, but a bubble very much remains a possibility in 2026, Colas says. Keep an eye on IPOs, M&A and how fast market levels rise from here.

Also remember that while the explosive growth in all things AI has valuations looking stretched, Goldman Sachs' Oppenheimer notes, "valuations often also understate the opportunities that can accrue in the nontechnology industries that can leverage the technology to generate higher returns."

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Venerable General Electric (GE), once the longest-serving member of the Dow Jones Industrial Average, will officially split into two companies at the start of next month.

And the old GE name is going away. 

GE will spin off GE Vernova on April 2, which will then start trading on the New York Stock Exchange (NYSE) under the ticker GEV. Holders of GE common stock will receive one share of GE Vernova common stock for every four shares of GE common stock held as of March 19.

Importantly, GE shareholders will continue to hold their shares of GE common stock – but now with the company name GE Aerospace, GE said in a press release. Meanwhile, GE Aerospace will continue GE's listing on the NYSE under the ticker symbol GE.

GE Vernova houses the former conglomerate's gas power and renewable energy business. GE spun off GE HealthCare Technologies (GEHC) in January 2023. 

GE first announced its decision to split into three companies focusing on aviation, healthcare and energy, respectively, in 2021.

Better times for GE stock?

GE stock is a long-time market laggard, but it has clobbered the broader market over the past year – and especially since its board set the GE Vernova spinoff date.

If you go back two decades, GE sports an annualized total return (price change plus dividends) of just 2%. The S&P 500 generated an annualized total return of more than 10% over the same period. Over the past 10 years, GE lagged the broader market by about 11 percentage points.

But GE's decision to split up helped change sentiment on the name. Its price performance is much more encouraging since it decided to split, with upside accelerating as the spinoffs came to fruition. GE's annualized total return easily tops the S&P 500 over the past five years, and doubles the broader market's returns for the trailing three-year period. 

Cut to today, and GE has been clobbering the broader market. Shares are up 85% on a price basis over the past 52 weeks, vs 26% for the S&P 500. For the year-to-date, GE is sitting on a 25% price gain, vs the broader market's 7%.

Even better, Wall Street likes the "new" GE's prospects as GE Aerospace going forward.

Of the 17 analysts covering the stock surveyed by S&P Global Market Intelligence, five call it a Strong Buy, two say Buy, six have it at Hold and three rate it at Sell. That works out to a consensus recommendation of Buy, with solid conviction. 

Bulls argue that GE Aerospace has significant advantages over rivals, among other reasons to be constructive on the stock. 

"Comparing its engine business vs its closest peers, we continue to see GE outperforming in the coming years," writes Morgan Stanley analyst Matt Akers, who rates the stock at Overweight (the equivalent of Buy). "GE's commercial engine fleet is approximately three times larger than its competitor's, giving it a bigger base to spread costs."

The analyst adds that GE's commercial engine fleet stands out vs peers due to better demographics. "Nearly two-thirds are mid-life engines in their prime aftermarket period," Akers notes. 

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Wall Street's top strategists collectively forecast another year of gains for the S&P 500, albeit a much more muted one. That's to be expected after the benchmark index gained more than fifth on a price basis in 2023.

Wall Street's average target on the index gives the S&P 500 implied upside of about 5% from current levels. At the high end, Capital Economics forecasts the benchmark index to hit 5,500 by the end of 2024, giving the S&P 500 implied price upside of about 15% next year. At the low end, JPMorgan Chase expects the index to retreat 12% to 4,200 in 2024. 

Passive investors will go along for the ride no matter where it takes them. Stock pickers, on the other hand, seek to beat their benchmarks, and that's where Wall Street's S&P 500 stocks with the most upside come in. 

Analysts base their Buy, Hold or Sell recommendations on how they expect a stock to perform relative to the S&P 500 over the next 12 months or so. To do so, they plug numbers into discounted cash flow models. These models spit out price targets, which tell them where the stock should be trading in a year. The difference between the stock's current price and its target is called its implied, or potential, upside. Analysts' average price targets tell you how the Street collectively expects a stock to perform.

While you can hardly base a stock-picking strategy on the sole criterion of price targets, it can be helpful to know which S&P 500 stocks are expected to deliver the biggest returns in the year ahead. To that end, we used S&P Global Market Intelligence to screen the S&P 500 for the index members with the highest implied upside for 2024 and beyond. 

Have a look at the table below to see the 10 S&P 500 stocks analysts expect to put up the biggest price gains in 2024. (Price targets and other data are as of December 22.)

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Healthcare stocks have had a rough few years. So why invest in them? First, I'm a contrarian. I like what's down. Second, healthcare is a booming industry, accounting for 18% of gross domestic product (GDP) in 2021, up from 12% in 1991. Third, the sector adds stability to any portfolio. 

On this last point, consider the Health Care Select SPDR (XLV), an exchange-traded fund (ETF) linked to an S&P Global sector index. During the most recent bear market, for instance, when the S&P 500 dropped 25% between January and mid-October 2022, the healthcare ETF fell only 13%. 

It stands to reason that healthcare is less volatile than other sectors. After all, in both good times and bad, people get sick and need the services of hospitals, pharmaceutical makers, drugstores, health insurers, medical device manufacturers and the whole apparatus of healthcare. In 2021 (the most recent year for statistics), the U.S. spent $4.3 trillion on healthcare. About one-third of that went to hospitals; one-fifth to doctors, nurses and clinical care; and one-tenth to pharmaceuticals. 

Four out of five hospitals are nonprofit, and opportunities for investing in physicians and their infrastructure are limited, so pharmaceutical companies tend to dominate healthcare mutual funds and ETFs. 

That has been a problem. S&P's pharmaceutical index has lost an annual average of close to 2% over the past five years, compared with an annualized gain of 11% for the S&P 500 as a whole. Shares of Pfizer (PFE), maker of three of the expected top 10 medicines in 2023, have lost nearly 30% so far this year, compared with a gain of 19% for the S&P 500.

Drug stocks can carry regulatory risk 

Investors are clearly nervous. Drug companies are unpopular with the public, and they have become a political target of both parties. Donald Trump issued an executive order to link the costs of our pharmaceuticals to lower ones in Europe, and under the Inflation Reduction Act of 2022, Congress launched a system of Medicare negotiations that will lead to price cuts for certain advanced medicines. Limits are also on tap in several states, including Colorado and Maryland. 

Some drug stocks, including Pfizer and AbbVie (ABBV), look beckoningly cheap, but there is just too much regulatory risk. I would stay away from prescription pharmaceuticals. 

As an alternative, look at stocks such as Kenvue (KVUE, $23), which Johnson & Johnson (JNJ) earlier this year spun off as a separate company. Kenvue has an impressive portfolio of over-the-counter medicines, such as Tylenol, Sudafed and Benadryl, plus other consumer brands (Band-Aid, Listerine and Neutrogena). 

The stock has dropped since its spring debut and now trades at a reasonable price-earnings ratio of 18, based on a consensus of analysts' profit forecasts. The projected dividend yield is 3.5%. By the way, with the spinoff, J&J agreed to retain all liabilities related to lawsuits over its talcum powder and to indemnify Kenvue. (Stocks and funds I like are in bold; prices and returns are as of August 31.) 

Another non-pharmaceutical choice is Stryker (SYK, $284), which makes knee and hip replacements – a growth industry as America gets older – as well as spinal implants for injuries and disease. With a P/E of 25, Stryker is not cheap, but profits have risen impressively and consistently. 

As for hospitals, they have not been a good business in recent years as profitable surgical and diagnostic procedures (such as knee replacements and colonoscopies) have migrated to outpatient centers. But HCA Healthcare (HCA, $277) owns both traditional hospitals and freestanding surgical, urgent care and rehab facilities. HCA has also managed to keep costs under control at a time when shortages of nurses and other staff are pushing expenses up elsewhere. Shares have nearly doubled since late 2019, but the P/E is just 14.

Insurers, innovators are among the best healthcare stocks

Probably the best healthcare business is insurance, and the best company in that subsector is UnitedHealth Group (UNH, $477). Shares have doubled in the past four years, but the price is still attractive at a P/E of 17. 

United also owns a pharmacy benefit manager called Optum Rx, which negotiates with drug companies on prices and takes a cut – an excellent business. I also like Cigna Group (CI, $275), which also owns a PBM and sells life insurance, too. It yields 1.8%, and its P/E is only 10. 

My favorite mutual fund in the sector, the Fidelity Select Health Care Services (FSHCX), recently loaded up on Cigna stock, now its third-largest holding (UnitedHealth is first). 

There's one more attractive category for health investors. Call it innovation. Consider Illumina (ILMN, $165), which provides tools that detect genetic variations. Its products are used by research institutes and companies that screen for cancer and other diseases. The stock became a darling of growth investors, rose too fast and lost roughly half its value in the first six months of last year. It's on the cutting edge of its field and attractive for risk-tolerant investors. 

Also look at Danaher (DHR, $265), which began life making industrial products and has evolved into a diagnostics and research company that provides physicians and scientists with instruments, including microscopes and blood-analyzing tools. 

Artificial intelligence has the potential to transform a sector that has been notoriously inefficient, but at this point, most AI-focused healthcare firms are still private. One that isn't is Augmedix (AUGX, $5), with a market capitalization (shares outstanding times price) of just over $200 million. The firm's software extracts data from conversations between physicians and patients and immediately turns it into medical notes. The notes are then transferred to the electronic record systems of healthcare providers, saving time and money. Augmedix, which went public in March 2021, is a risky stock with a big potential payoff but a potentially serious downside, too. 

West Pharmaceutical Services (WST, $407) has been bucking the flat-to-downward trend in healthcare shares, its stock returning 73% since the start of 2023. West makes delivery systems for injectable drugs – a business segment that could see a boost from price controls, which can benefit drugs that are injected rather than swallowed. Also rising lately is Intuitive Surgical (ISRG, $313), whose robotics and other tools make surgeries less invasive. 

Although I'm eschewing individual pharmaceutical stocks, I can enthusiastically recommend the Invesco S&P 500 Equal Weight Health Care (RSPH), an ETF with 65 holdings that are each weighted the same (about 1.6% when the fund is rebalanced each quarter) rather than by market cap, which would make the portfolio lopsided with big drugmaker stocks. Pharmaceuticals represent just 15% of assets; equipment and supplies, 29%. The fund's expense ratio is just 0.4%. 

James K. Glassman chairs Glassman Advisory, a public-affairs consulting firm. He does not write about his clients. He owns none of the stocks listed here. You can contact him at  JKGlassman@gmail.com.

Note: This item first appeared in Kiplinger's Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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More than 80,000 Kaiser Permanente union workers say they are prepared to walk out if they do not reach an agreement with the healthcare giant before their contract expires on Sept. 30.

The national bargaining team of the Coalition of Kaiser Permanente Unions - which represents workers in California, Colorado, Oregon, Virginia, Washington, and Washington, DC - notified Kaiser on Sept. 22 that it is calling for a three-day strike beginning Oct. 4, according to a statement from the SEIU-United Healthcare Workers West (UHWW), part of the Coalition.

It would be the largest healthcare industry strike in U.S. history, the Coalition said. It would far exceed a walkout by 53,000 University of California healthcare workers in 2018, which currently stands as the largest work stoppage in the industry’s history.

It would also be the latest example of labor unrest across the U.S. economy this year. Strikes or threats of strikes so far this year involve unions from various industries including autoworkers, flight attendants, pilots, UPS drivers and writers.

The Coalition is seeking higher wages, bonuses and more staffing among other demands.

If Kaiser “continues to commit unfair labor practices," another longer strike would be called and include the Washington state union whose contract expires on Oct. 31, UHWW said. 

“Kaiser executives refuse to acknowledge how much patient care has deteriorated or how much the frontline healthcare workforce and patients are suffering because of the Kaiser short-staffing crisis,” Dave Regan, SEIU-UHWW president, said in a statement.

Plans in place to continue healthcare services

Kaiser declined Kiplinger’s request for comment. The Coalition did not respond to requests for comment.

In a Sept. 15 statement on its website, Kaiser said that unions account for 75% of its workforce. The company said it has made a number of offers including wage increases, a minimum wage starting at $21 an hour, as well as continuation of its existing health benefits and retirement income plans. 

Kaiser also said it is disappointed that the union authorized a strike but that it has comprehensive plans in place for continued access to needed healthcare services should a strike occur later this year.

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Warren Buffett's Berkshire Hathaway (BRK.B) initiated a small stake in The New York Times Company (NYT) in the fourth quarter but continued to pare back bets on core holdings such as Apple (AAPL) and Bank of America (BAC).

Buffett, who stepped down as CEO at the end of 2025 but remains chairman of the holding company, continued to cut Berkshire's exposure to equities as the market hit record highs.

In what was perhaps a nod to stretched valuations, Berkshire was once again a net seller of stocks, with net sales of approximately $4 billion in Q4. The holding company has now sold more stocks than it has bought for 13 consecutive quarters.

While exact figures will have to wait until Berkshire releases quarterly earnings on February 28, it's estimated that the company was a net seller of stocks to the tune of $14 billion in 2025.

Over the past three years, Berkshire sold more than $190 billion worth of equities. Also noteworthy is that Berkshire hasn't bought back its own stock since May 2024.

With a market cap of more than $1 trillion, Berkshire maintains a sort of "barbell" portfolio, as it holds approximately $280 billion in stocks and more than $380 billion in cash.

Although Berkshire has become more cautious, it did do some shopping in Q4. In addition to buying NYT, the holding company increased stakes in four of its holdings.

Before we get into Berkshire's most recent buys and sells, it's important to know that Buffett has always run a highly concentrated portfolio.

Excluding the company's Japanese brokerage stocks and other overseas equities, Apple alone accounts for more than a fifth of Berkshire's stock portfolio. (That's down from more than 40% at its peak.)

Furthermore, Berkshire's top five U.S. equity holdings comprise about 70% of its portfolio value, while the top 10 account for 88%.

As Buffett likes to say, diversification is for those who don't know what they're doing.

Also, please note that while Warren Buffett traditionally managed Berkshire Hathaway's largest equity positions, the management structure has officially transitioned.

Buffett has confirmed that CEO Greg Abel now oversees the entire portfolio, supported by investment manager Ted Weschler. Notably, Todd Combs – who previously managed a portion of the portfolio alongside Weschler – departed in late 2025 to take a role at JPMorgan Chase (JPM).

Stocks Warren Buffett is buying

Berkshire boosted its biggest bet in the energy sector, increasing its stake in Chevron (CVX) by almost 7%, or more than 8 million shares. Berkshire, which has owned the Buy-rated Dow Jones stock since the fourth quarter of 2020, now owns more than 130 million shares worth $19.8 billion as of the end of Q4. With a weight of more than 7% in the portfolio, CVX is Berkshire's fifth-largest holding.

In a boost of confidence for Chubb (CB), Berkshire once again upped its stake in the insurer. The holding company, which first bought CB in the first quarter of 2024, increased its position by more than 9%, or almost 3 million shares. With a market value of $10.7 billion as of December 31, CB remains the eighth-largest Berkshire Hathaway holding.

Elsewhere, Berkshire made minor additions to four of its smaller holdings.

Berkshire continued to add to its investment in Domino's Pizza (DPZ), which it initiated in the third quarter of 2024. The holding company increased its stake by more than 12% and now owns nearly 3.4 million shares in the pizza chain worth $1.4 billion as of the end of Q4. However, with a weight of 0.5% in the portfolio, DPZ is Berkshire's 20th-largest position.

As noted above, Berkshire initiated a small stake in NYT, purchasing 5 million shares worth $352 million at the end of Q4. With a weight of about 0.1%, the stake is Berkshire's 30th-largest position.

Lastly, Berkshire made an incremental and essentially immaterial additional investment in Lamar Advertising (LAMR). With a market value of $152 million, LAMR accounts for less than 0.1% of the portfolio.

Stocks Warren Buffett is selling

Buffett continued to pare back Berkshire's position in Apple, which, as recently as 2024, accounted for roughly 40% of its U.S. holdings. The company sold more than 10 million shares over the course of the fourth quarter – a 4% reduction – but Buffett has hardly lost faith in the iPhone maker.

With nearly 228 million shares worth $62 billion as of December 31, AAPL remains Berkshire's largest holding by far, accounting for nearly 23% of the portfolio's total value.

In another reprise from previous quarters, Buffett once again sold Bank of America stock, which has been a major holding since 2017. Berkshire reduced its investment in the nation's second-largest bank by assets by another 9% in Q4, selling more than 50 million shares.

With 517 million shares worth more than $28 billion as of December 31, BAC is Berkshire's third-largest holding, accounting for more than 10% of the portfolio value.

In other sales, Berkshire continued to ease up on DaVita (DVA), its 11th-largest holding, but only by 1.3%. The company also reduced exposure to Constellation Brands (STZ), a stake it initiated at the end of 2024, by 3%.

Other stocks Berkshire pared its stakes in included Aon (AON), Pool Corp. (POOL), Liberty Latin America Class A (LILA) and Atlanta Braves Holdings (BATRK).

Interestingly, Berkshire's most significant reduction in percentage terms was its stake in Amazon.com (AMZN). The conglomerate cut its position by 77%, offloading nearly 8 million shares of the Magnificent 7 stock. With a market value of approximately $525 million, Amazon has tumbled from Berkshire's 17th-largest holding at the end of Q3 to its 27th-largest position as of year-end 2025.

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Cigna Healthcare plans to launch a new feature on its MyCigna benefits platform next year that allows users to track their mental, physical and social health progress by connecting to compatible fitness devices.

The company, the health benefits division of Cigna Group, said it is linking with artificial intelligence-based technology provider Virgin Pulse to provide the service. Plans call for an initial roll out on Jan. 1, 2024 for certain Cigna customers who receive coverage through their employers. The company said it plans to expand the service over time.

Under the plan, participants will be able to use Apple Watches or other compatible fitness devices to log daily metrics such as their weight, time slept and minutes exercised. They will also be able to share their activity with anyone who uses the platform.

MyCigna can use participants’ logged data, preferences and claims experiences to connect them to other relevant programs available through their Cigna Healthcare benefits, such as pre-diabetes management or behavioral health services, Cigna said. 

"Digital health programs improve health outcomes and enhance vitality for individuals and their communities," said Heather Dlugolenski, senior vice president, commercial strategy and solutions at Cigna Healthcare.

Health care unit helped boost Cigna's 2Q sales

On Aug. 3, Cigna Group reported second-quarter adjusted sales of $48.6 billion, up 7% from the same year-ago period. The company said the increase reflects strong contributions from its Cigna Healthcare and Evernorth Health Services, its other health services unit, which partially offset the absence of revenues from businesses it divested. These included the sale of life, accident and supplemental benefits businesses in six countries to Chubb INA Holdings in July 2022.

Cigna Healthcare’s adjusted revenue for the quarter rose 12% to $12.7 billion over the same period last year. Both customer growth and premium rate hikes accounted for some of the uptick, Cigna said.

Cigna Group reported a net income slide in the quarter to $1.46 billion, compared with $1.56 billion in second-quarter 2022, which the company attributed to the absence of income from those divested businesses.

The news follows the launches last April of Copay Assurance plan and ClearCareRx, under Evernorth’s pharmacy benefits manager Express Scripts.

The Copay Assurance plan aims to lower the out-of-pocket costs for customers for prescription drugs under a client’s prescription drug benefit, Cigna said. Under the program, customers will pay no more than $5 for generics and specialty generics, $25 for preferred brand drugs, and $45 for preferred specialty brand drugs when they fill a prescription, the company said.

Features of the ClearCareRx program include allowing employer, health plan and government employer customers to pay what Express Scripts pays pharmacies for a prescription, and allowing them to receive 100% of drug rebates that Express Scripts obtains by negotiating with pharmaceutical companies.

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Starting early in 2020, Covid-19 put an unusually bright spotlight on the healthcare sector. Nearly three years later, while Covid hasn’t completely disappeared, the crisis has eased. 

The future of healthcare post-Covid is a discussion taking place in boardrooms and households across the country. Professional investors are evaluating the healthcare trends developing post-Covid that can make money for their clients. Do-it-yourself (DIY) investors are wise to do the same.

If there is a sector that belongs in every DIY investor’s portfolio, healthcare would be it. Between the favorable demographics of an aging population to the generally stable earnings growth of healthcare companies, healthcare stocks should deliver healthy returns over the long haul.

So, as we move out of the pandemic phase of Covid into an endemic situation where life goes on despite ongoing cases of the virus, trends are developing for a post-Covid world.

Here are three DIY investors that can ride to long-term profits.

Innovation Will Be a Big Theme 

The process for developing the Covid vaccines was faster than any before. However, that doesn’t mean healthcare professionals are sitting around patting themselves on the back. On the contrary, they know innovation must keep pushing to the limits to ensure people are kept safe from future viruses. 

“We can do this more quickly if we are well prepared,” Florian Krammer, Ph.D., a professor of vaccinology at the Icahn School of Medicine at Mount Sinai in New York, told Association of American Medical Colleges contributor Patrick Boyle in July. 

“For influenza virus, we get variants each year. And because there are already influenza virus vaccines with an established safety record and a known correlate of protection [measurable signs that a person is immune], we can just make a strain change to update the vaccine — without the need for lengthy clinical development.”

Innovation is a theme that professional investors are watching with great interest. Covid revealed the strengths and weaknesses of the U.S. healthcare system. Innovation is needed to repair the cracks in the system. 

Chris Shott, a healthcare analyst with J.P. Morgan, sees a host of innovation happening in the sector, specifically in biotech. The analyst recently said good things about Horizon Therapeutics (HZNP).

“[W]e like Horizon Therapeutics, which had one of the best product launches in that category with a drug called Tepezza for treatment of thyroid eye disease,” Shott told Barron’s in September. 

In two years, Tepezza went from zero sales to $2 billion. Shott believes it could grow annual revenues to as much as $4 billion. 

Demand for Home-Based and Virtual Care to Increase 

 A McKinsey & Company article from July suggested a shift from more expensive healthcare sites such as acute and post-acute facilities to less expensive home-based services and virtual care.   

“We estimate that hospitals’ share of overall provider revenue could decline from about 47 percent in 2019 to about 44 percent by 2025, while the share of home and ambulatory sites will increase by one to two percentage points each over the same period,” stated the July 19 article. 

UnitedHealth Group (UNH) is using home- and community-based care to deliver more value for the patients it serves. The company’s Optum HouseCalls program is one such initiative. 

HouseCalls is an annual in-home clinical assessment that provides a complete picture of a patient’s overall health. This helps health plans manage care while reducing reimbursement issues. In addition, the service helps reduce overall healthcare spending. 

UnitedHealth’s most significant move into home healthcare will happen when and if it completes its acquisition of LHC Group for $5 billion.   

Either way, home-based care will only grow in the years ahead.

Healthtech Continues to Change Sector 

Healthcare technology is one area of the sector that’s expected to continue gaining traction post-Covid. McKinsey & Co. estimates that the healthcare services and technology segment are expected to grow by 8.2% annually from $50 billion in 2021 to $70 billion in 2025.  

One company that continues to use technology to transform its business is Becton Dickenson (BDX). Known for providing medical supplies to hospitals and other healthcare facilities, it generates about 50% of its revenue from technology solutions, making it one of the largest medical technology companies worldwide.

Wellington Management portfolio manager Ann Gallo owns BDX stock.  

“Becton Dickinson trades for a lower valuation. Its business is half medical supplies and half life-sciences tools and technologies,” Gallo told Barron’s. “It offers both an attractive value proposition and a nice growth outlook."  

Health insurance premiums and drug costs will rise a bit more than usual in 2023. Ed Kaplan, senior vice president of The Segal Group, expects health insurance premiums to pick up 7% to 8% in 2023, slightly more than the 6% average yearly increase seen over the past several years. The main difference between 2023 and previous years will be higher prescription drug costs, which will jump 10%, the highest in the past ten years.

There are two main reasons: First, pharmaceutical companies are introducing better, but more expensive, drugs for a number of important conditions. For example, a new drug to treat HIV is more effective, but it is also twice the cost of the previous treatment. In most years, the total drug cost would be tempered by other brand-name drugs that were being replaced by generics, but in 2023 there are fewer of these than usual.

Second, pharma companies are raising the prices they charge to private health insurance plans. This is because they anticipate having to lower the prices they charge to Medicare. The Inflation Reduction Act which was passed in 2022, allows Medicare to negotiate drug prices for the first time. Currently, only 10 drugs are on the negotiation list, but these are widely used. The list will rise to 20 drugs in later years.

There is a bit of good news in all the gloom: The “No Surprises” Act that went into effect in January of 2022 is already having its intended effect of lowering surprise out-of-network charges to hospital patients, according to early data.

Biotech stocks were some of the best performers at the start of the pandemic. More recently, though, they've vastly underperformed the broader market.

Case in point: In 2021, the SPDR S&P Biotech (XBI) lost 20.5%, compared to the S&P 500's 26.9% gain. And in 2022, the XBI is currently down 27.1%, while the S&P 500 has lost 10.4%.

Part of this underperformance can be blamed on the high number of small, early stage biotech companies that took advantage of the economic recovery and a red-hot initial public offering (IPO) market. In 2021, 96 biotech companies entered the public market, compared to just eight in 2011. Many of these companies had just a few patents and little to no revenue.

And while many biotech stocks fail due to a lack of product efficacy or safety, the industry continues to attract investors because the companies that are able to successfully develop effective treatments can see their stock prices skyrocket. Further, the biotech industry is constantly innovating and improving upon existing treatments.

Perhaps most intriguing about biotech stocks is that they are disconnected from geopolitical risk and economic uncertainty – two themes dominating current headlines.

So while it's no secret that investing in this industry is volatile and challenging, there is opportunity. But figuring out which biotech stocks to invest in can be tricky. One tool to help investors sift through the noise is the Stock News POWR Ratings system, which utilizes 118 different factors to determine which stocks are most likely to outperform.

With this in mind, here are the seven of the best biotech stocks to add to your portfolio. Each is rated a Buy or Strong Buy in the POWR Ratings System due to their respective strength across a variety of measures, including valuation, sentiment and fundamentals.

Data is as of April 25. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.

• Market value: $134.6 billion
• Dividend yield: 3.1%
• POWR Ratings overall rating: B (Buy)
• POWR Ratings average broker rating: 2.65

Amgen (AMGN, $252.17), founded in 1980, is a pioneer in biologics. Total product sales accounted for 93.5% of AMGN's 2021 revenues. The company's three top-selling drugs are Enbrel for inflammatory diseases, Prolia for osteoporosis and Otezla for plaque psoriasis. These three drugs made up more than 38% of AMGN's sales last year.

The company also derives the vast majority of its revenues from America. This concentration in AMGN, in terms of its products and geography, does pose risks that investors should consider. For instance, another company could start selling a better or cheaper drug that addresses the same issues. Another potential risk is if a deal is made in Congress that lowers the price of prescription drugs, which would undermine Amgen's margins.

On the other hand, it's also an opportunity as AMGN's international sales have been steadily growing, with the company showing particularly strong growth in the Asia-Pacific region. The Dow Jones stock also has a proven record of making successful partnerships and acquisitions to ensure growth and keep its pipeline well-stocked.

Examples include Amgen taking a 20.5% stake in BeiGene (BGNE) in 2019, which gave it entry into the Chinese oncology market. That same year, AMGN acquired the drug Otezla from Celgene. And last year, it bought Five Prime Therapeutics that gave it bemarituzumab, a treatment for gastric cancer that is currently in a Phase III trial.

This merger-and-acquisitions (M&A) strategy is essential for Amgen as the company is losing patent protection for several products over the next decade – including for its blockbuster drug Prolia. But Amgen has plenty of future growth drivers in its lineup, including in drugs such as tezepelumab, sotorasib and KHK4083.

Tezepelumab is an asthma treatment that gained approval from the Food and Drug Administration (FDA) last year. It's also being studied as a treatment for other diseases including chronic obstructive pulmonary disease and chronic rhinosinusitis. Sotorasib also recently got FDA approval to treat a specific type of lung cancer, while KHK4083 is in a late-stage trial to study its effect on inflammatory diseases.

AMGN has shown steady growth in recent years and its 2021 results were no different. For the full year, AMGN recorded earnings of $17.10 per share and revenue of $26 billion, up 6% and 2.1% year-over-year, respectively. This year, analysts are forecasting a modest improvement to $17.65 in earnings per share (EPS) and $26.2 billion in revenue.

Amgen has an overall rating of B (Buy) in the POWR Ratings system. B-rated stocks have posted an average annual performance of 20.1% since 1999, which outpaces the S&P 500's average 8% annual gain. AMGN is one of the best biotech stocks in terms of Quality, earning an A for its POWR Grade, due to its strong balance sheet, low debt and well-regarded management team. See the complete POWR Ratings for AMGN.

• Market value: $31.5 billion
• Dividend yield: N/A
• POWR Ratings overall rating: B (Buy)
• POWR Ratings average broker rating: 2.19

Biogen (BIIB, $214.54) focuses on developing therapies and treatments for neurological and neurodegenerative diseases such as multiple sclerosis (MS), Alzheimer's, dementia, Parkinson's and spinal muscular atrophy. These include Tecfidera, Vumerity, Spinraza and Fumaderm to name a few.

Over the past year, BIIB stock is down 20%. A major factor in share-price decline is the controversial approval of its Alzheimer's disease drug, Aduhelm. The treatment has failed to generate much traction in the market as there remain questions about its efficacy, and so far, many insurers and the Centers for Medicare and Medicaid Services (CMS) are not covering it. Last quarter, it only generated $1 million in sales. The drug was also rejected by Japanese and European authorities.

Another challenge for the healthcare stock is that Tecfidera, its MS drug, is now facing generic competition. Last year, the treatment accounted for about 25% of Biogen's total revenue, but is expected to see a significant decline in sales this year.

To counter this, the company has been aggressively making deals to bolster its pipeline. Over the last five years, BIIB has made over 20 acquisitions, licensing or development deals.

Currently, it has a candidate in clinical trials, BAN2401, which is targeted toward early onset Alzheimer's disease, dementia and cognitive impairment. Phase III trials are ongoing and expected to last until 2024. However, there is some hope of accelerated approval due to positive safety data.

Last year, BIIB reported an 18% decline in revenue to $11.0 billion – due in part to Tecfidera's expiring patent. This year, analysts expect revenue to fall another 10% to $9.9 billion. The stock price seems to have already priced in this deceleration as it's down 55% from its all-time high in June 2021, hit following the FDA approval of Aduhelm.

As such, BIIB has a Value Grade of A in the POWR Ratings system, part of its overall B (Buy) rating. The stock's forward price-to-earnings (P/E) ratio of 13.6x is significantly cheaper than the S&P 500.

Biogen also has a Quality Grade of B due to being one of the leading biotech stocks developing treatments for neurological diseases, even with its Aduhelm setback. It also has consistent royalty revenue for many of its franchises including MS drug Ocrevus, which saw a 29% increase in the last quarter. Plus, BIIB has a strong balance sheet with minimal debt and nearly $3 billion in cash. Get the full rundown of BIIB POWR Ratings analysis.

• Market value: $15.8 billion
• Dividend yield: 0.3%
• POWR Ratings overall rating: B (Buy)
• POWR Ratings average broker rating: 1.22

Bio-Techne (TECH, $400.91) is a supplier and manufacturer of biological materials like high-quality purified proteins and reagents like cytokines, growth factors and antibodies. These are used by pharmaceutical and biotech companies for their drug development and testing processes, specifically for genetic and cellular-based therapies. In addition to this, TECH also provides instruments and custom manufacturing solutions.

Thus, TECH provides investors with exposure to the genomics industry which is expected to grow at a roughly 14% rate over the next decade, according to research firm Research and Markets. And as a supplier to the industry, it has less risk than other biotech stocks that use genomics to develop drugs and bring them to market.

Given this potential upside, it's not surprising that Bio-Techne is richly valued with a forward P/E ratio of 44.3x.

Still, TECH is displaying strong momentum, as evidenced by its recent earnings report which showed a 17% year-over-year increase in revenue in the final three months of 2021. And adjusted earnings jumped 16% from the year prior to a record $1.88 per share. It also announced a $400 million share buyback and achieved a milestone with revenues exceeding $1 billion on a trailing twelve-month basis.

In 2022, analysts are forecasting $7.95 in EPS and $1.1 billion in revenue which would be year-over-year improvements of roughly 18% each. Margins are also expected to trend higher with increasing volume. Bio-Techne has a good mix of slow and steady expansion from its older reagent business with strong growth, albeit from a small base, in its genetic and cell therapy products.

TECH boasts a B (Buy) rating in the POWR Ratings system – due in part to a Sentiment Grade of B, which it earns from a bullish Wall Street analyst community. Five of six covering analysts call the stock a Buy, with a consensus price target implying 30% upside to current levels.

Bio-Techne also has a Quality Grade of B. This is thanks to a strong balance sheet and returning cash to shareholders through dividends and buybacks while staying on a growth trajectory. Take a closer look at TECH's full POWR Ratings.

• Market value: $3.0 billion
• Dividend yield: N/A
• POWR Ratings overall rating: B (Buy)
• POWR Ratings average broker rating: 1.40

Harmony Biosciences Holdings (HRMY, $50.03) develops and designs drugs for rare neurological disorders. The company was founded in 2017 and made its public debut in 2020 at a valuation of $1.5 billion. Since its IPO, HRMY is up nearly 30%.

HRMY has one product on the market, WAKIX, but it's been remarkably successful. The drug is used to treat adult patients with narcolepsy and helps reduce excessive daytime sleepiness.

As a result, the company is in the midst of an earnings boom. In its most recently reported quarter, HRMY posted adjusted earnings of 63 cents per share, which beat estimates for earnings of 32 cents per share and marked a significant improvement over the 25 cents per share Harmony Biosciences reported in Q4 2020. Revenue for the three-month period was higher by 62%.

Wall Street analysts are forecasting more growth in 2022. They see $1.94 in EPS and $443.5 million in revenue for the full year, compared to 2021's 58 cents per share in earnings and $305.4 million in sales. And for fiscal 2023, analysts expect $5.06 in EPS and $794 million in sales – which makes the stock quite cheap on a forward-looking basis.

Another positive catalyst is likely to be higher margins with increased volumes. The company is also working on getting WAKIX approved for other types of cognitive disorders. Management has also discussed using free cash flow – or the money left over after a firm has met its financial obligations – to acquire other companies or assets to stock its pipeline.

HRMY has an overall B (Buy) rating in the POWR Ratings system. Included in this score is a Growth Grade of B amid expectations for double-digit earnings and revenue growth over the next couple of years. Check out the complete POWR Ratings for HRMY, including a deeper dive into its component scores.

• Market value: $75.8 billion
• Dividend yield: N/A
• POWR Ratings overall rating: B (Buy)
• POWR Ratings average broker rating: 2.00

Regeneron Pharmaceuticals (REGN, $690.33) is one of the best biotech stocks in terms of technical performance. Shares are up roughly 40% in the last 12 months, compared to a 20% decline for the iShares Biotechnology ETF (IBB). A major factor is REGN's COVID-19 treatment, REGEN-COV, which contributed $6.2 billion in revenue in 2021.

It's likely that REGEN-COV could have a smaller impact on Regeneron's top line going forward, though, considering it failed to show efficacy in terms of dealing with the omicron variant. Another factor is Pfizer's (PFE) Paxlovid pill, which has shown strong evidence of reducing death and hospitalization and is effective against omicron.

However, the stock's outperformance has continued despite this headwind due to its growth and presence in many other large markets. These include cancer, cardiovascular issues, eye disease, inflammation and asthma. Its most well-known products are Eylea for macular degeneration, Praluent to help manage cholesterol levels and Dupixent for asthma.

Eylea is the company's largest contributor to revenue – adding $5.8 billion to REGN's bottom line last year – and it's being prescribed for diseases beyond macular degeneration such as diabetic macular edema and macular edema. Due to an aging population and increasing rates of diabetes in developed countries all over the world, sales should keep rising.

Another catalyst is that Eylea's Phase II trials for high-dose usage showed positive results and Phase III results are expected later in the year.

In all of 2021, REGN had $16.1 billion in revenue, an 89% increase over 2020. Without its coronavirus treatment, revenue growth would have been 19%. For fiscal 2022, analysts are forecasting $11.7 billion in revenue, though the company is expected to return to growth in 2023.

Regeneron is another of the B-rated biotech stocks in the POWR Ratings universe, which equates to a Buy. Included in this score is a Quality Grade of B, due to the company's track record of successful drug development and patent protection for core products.

REGN also boasts a Value Grade of B. Concerns over slowing revenue growth in the short term have pressured shares in recent weeks, and the stock is currently trading at just 13 times analysts' average fiscal 2023 earnings estimate – well below the S&P 500's forward P/E ratio of 19.2x. Here are the complete POWR Ratings for REGN.

• Market value: $2.4 billion
• Dividend yield: N/A
• POWR Ratings overall rating: A (Strong Buy)
• POWR Ratings average broker rating: 1.83

Corcept Therapeutics (CORT, $22.76) researches and develops drugs to target severe disorders that are due to unstable cortisol levels. Cortisol is the body's stress hormone and it can create adverse effects on health if not properly modulated, specifically in areas like metabolism, mental health and cancer.

Corcept Therapeutics went public in 2004 at a valuation of $49 million with a single compound that was the basis for Korlym, which is the company's sole product. Currently, the firm has a valuation of $2.5 billion with $366 million in sales over the last 12 months.

CORT received approval for Korlym in 2012, and it has steadily grown since then as an approved treatment for adult patients with endogenous Cushing's syndrome, suffering from type 2 diabetes. The company is working on approval for additional indications that could potentially increase the total addressable market for Korlym. For Cushing's, the drug has been given orphan status that gives it exclusivity until 2037, although it is being challenged by generic drug manufacturers.

The company also has four different drug candidates that are in different stages of clinical trials. Most promising is Relacorilant, which could be an improvement over Korlym due to fewer side effects and has also shown some positive effects against several cancers. Another potential blockbuster is Exicorilant which is in Phase 1 and 2 trials as a treatment for castration-resistant prostate cancers.

CORT is the first of the A-rated (Strong Buy) biotech stocks in the POWR Ratings universe featured here. A-rated stocks have posted an average annual performance of 31.1% since 1999, which compares favorably to the S&P 500's average annual 8% gain.

Part of the stock's overall rating is a Value Grade of B as it sports a low forward P/E ratio of 11.7x, has not debt and boasts above-average profit margins of 30%. Corcept Therapeutics also has a Quality Grade of A due to its well-regarded management team, strong balance sheet and stock buybacks to the tune of $200 million. Check out the full POWR Ratings for CORT.

• Market value: $16.9 billion
• Dividend yield: N/A
• POWR Ratings overall rating: A (Strong Buy)
• POWR Ratings average broker rating: 2.07

Incyte (INCY, $76.56) was founded in 2002 by a team of scientists to discover and develop small-molecule drugs, monoclonal antibodies and bispecific antibodies. So far, the company has developed a wide variety of drugs with applications in oncology, dermatology, autoimmune diseases and targeted therapies.

Its leading seller is Jakafi, a treatment for two types of blood cancer. Its uses include myelofibrosis, polycythemia vera and aGVHD. Other major contributors to revenue are Olumiant for rheumatoid arthritis, Iclusig for leukemia, Pemazyre for bile duct cancer, Tabrecta for lung cancer and Monjuvi for diffuse large B-cell lymphoma.

INCY has patent protection for Jakafi until 2027 and it continues to see expanded use for other indications. However, this fear of a "patent cliff" has likely contributed in part to its stock price underperformance over the last two years despite rising revenues.

Specifically, INCY is up 13% since mid-March 2020, while the S&P 500 has spiked 83%, and IBB has returned 25%. And since Q2 2020, INCY's revenues are up 25% and EPS have nearly doubled. This top- and bottom-line growth is expected to continue, with analysts forecasting increases of 14% and 25%, respectively, this fiscal year.

And Incyte has a promising pipeline which could help ease the blow of the expiry of Jakafi's patent protection down the road. One potential is Opzelura – a dermatology drug that had around 19,000 new patients in Q4 2021 and is in late-stage trials for several skin conditions. The company is also partnering with Novartis (NVS) and Eli Lilly (LLY) on increasing the distribution of its treatments to Europe and Japan.

Not only is Incyte a top pick among billionaire investors, but it is also another of the A-rated (Strong Buy) biotech stocks in the POWR Ratings system. INCY has a Sentiment Grade of B as eight out of 14 Wall Street analysts have a Buy or Strong Buy rating on the stock, with only two deeming it a Sell.

INCY also has a Quality Grade of B due to its strong balance sheet, large cash holdings and impressive 94.9% gross margins – higher than its fellow biotech stocks and the broader market. Check out the complete POWR Ratings for INCY.

Big pharmaceutical stocks are appealing because they provide medicines that people rely on to improve their quality of life, and therefore will likely not cut back on regardless of the economic environment.

Furthermore, with the ever-rising cost of healthcare in the U.S., it seems a foregone conclusion that new drugs developed by pharmaceutical companies will be steep in price – and generous in profit margins as a result.

Some traders piled into pharmaceutical stocks amid the pandemic in hopes of playing the short-term opportunity. However, long-term dividend investors are familiar with this sector because drugs that make your body hurt less and prolong your lifespan are likely to be prioritized in your daily budget. That means reliability in revenue to provide stable share prices and support generous dividends.

These nine pharmaceutical stocks are among the best for income investors. Each offers a dividend yield that's at or above the market average, and they all deliver consistency that buy-and hold investors can appreciate.

Data is as of Oct. 4. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.

• Market value: $192.1 billion
• Dividend yield: 4.8%

As far as pharmaceutical stocks go, AbbVie (ABBV, $108.73) has put in a strong performance since its March 2020 lows near $65, with the shares up 68%. More recently, an August rally lifted ABBV stock back near its 2018 highs above $120 thanks to strong financials and product development news.

Specifically, ABBV's second-quarter results showed revenue of about $14 billion, up more than 19% on an operational basis over the prior year, with a 32.9% year-over-year improvement in adjusted earnings to $3.11 per share.

AbbVie's earnings were driven in part by continued resilience of its Humira drug revenue, despite a loss of European patent protection a few years back. Strong growth for drugs Skyrizi and Rinvoq that treat autoimmune disorders also contributed, with each seeing sales rise by double-digit percentage points on a sequential basis.

Beyond this earnings momentum in August, long-term income investors should have a lot of faith in ABBV stock looking forward, too. Born out of a 2013 spinoff from Abbott Laboratories (ABT), AbbVie's roots go back more than 130 years – including an enviable track record of 49 consecutive years of dividend increases.

Heading into 2022, AbbVie is looking particularly strong on the heels of a $63-billion acquisition of Allergan in 2020 that is now largely integrated into operations and starting to show up in the bottom line. One particularly interesting angle here is Allergan's Botox cosmetics line. Sales of the anti-wrinkle injection doubled in Q2, and are forecast to see a big boost as remote working and social distancing trends start to wane amid COVID-19 vaccinations and general reopenings.

• Market value: $187.6 billion
• Dividend yield: 2.4%

In July, U.K.-based pharmaceutical stock AstraZeneca (AZN, $60.54) closed on a $39-billion takeover deal for competitor Alexion Pharmaceuticals as its latest bet on the lucrative "orphan drug" market. These treatments are often the only remedy for serious medical conditions. As such, they can be fast-tracked for approval by regulatory agencies. Additionally, they allow for instant demand and big margins from patients in need.

This isn't the only angle for AZN, of course. The company has developed blockbuster drugs, particularly in the oncology space. One such drug is lung cancer treatment Tagrisso that has been proven to reduce recurrence or death by 83% in patients.

Alexion Pharmaceuticals will contribute two blockbuster drugs. One is chemotherapy treatment Soliris that fits nicely into the current AZN portfolio of cancer therapies. The other is Ultomiris that is used to treat hemolytic uremic syndrome (aHUS), a rare chronic blood disease.

In Europe and the U.K., dividend payers often don't follow the fixed quarterly cycle that U.S. stocks do. But even though AZN only pays out distributions twice a year, its yield is still almost twice the average dividend among S&P 500 components at present.

• Market value: $130.9 billion
• Dividend yield: 3.3%

When it comes to legacy pharmaceutical stocks, Bristol Myers Squibb (BMY, $58.93) has roots dating back to 1887. BMY has manufactured a host of popular products over the years, including mass producing the original antibacterial blockbuster, penicillin, during World War II.

However, this is hardly a company stuck in the past, as evidenced by its massive $74 billion deal to acquire next-generation biotech stock Celgene in 2019. Not only does this move ensure a robust product pipeline for BMY for many years to come, but also billions of dollars in operational efficiencies on top of that.

Admittedly, BMY stock has stalled out around the $70 mark over the last few years – particularly as some of the early coronavirus treatment hopes didn't really materialize for this pharma stock as they did for its competitors.

But it has plenty of big-name blockbuster drugs under its belt regardless of the pandemic – including cancer immunotherapy Opdivo that brought in $7 billion last year and blood clot treatment Eliquis, developed in collaboration with Pfizer (PFE), that saw sales top $9 billion. These are two powerhouses that industry insider Evaluate Pharma predicts will be the third-best and second-best sellers in the world, respectively, among all prescription drugs in five years' time.

And from an income perspective, this drugmaker has built on its record of dividend increases. Most recently, it bumped its quarterly payout in December, from 45 cents per share to 49 cents per share – the 12th straight year of consecutive increases. And with that $1.96 per share annual payday being just a fraction of the projected $7.50 in fiscal 2021 earnings per share, you can pretty much bank on future increases on top of that, too.

• Market value: $215.1 billion
• Dividend yield: 1.5%

A $215-billion powerhouse, Big Pharma icon Eli Lilly (LLY, $224.85) is not just one of the largest drugmakers on the planet, but it currently makes the list of the top 40 largest corporations in the U.S. by market capitalization – roughly the same size as Intel (INTC) and Danaher (DHR).

With scale like that, investors get stability and a strong balance sheet. But that doesn't mean LLY is a legacy pick among pharmaceutical stocks whose best days are behind it. Shares are currently trading around all-time highs after roughly doubling from the pandemic lows of March 2020. For the year-to-date, Eli Lilly is up more than 33%.

Admittedly, LLY offers one of the smaller yields on the list, as measured by current dividend payments. But its quarterly payout of 85 cents per share is up roughly 67% from just 51 cents per share in 2016, and represents less than half of projected earnings this fiscal year, so there's likely more increases in store for shareholders.

And looking forward, the pharmaceutical company's type 2 diabetes drug Jardiance was recently approved by the Food and Drug Administration (FDA) to treat heart failure with reduced ejection fraction (HFrEF) in people with or without diabetes, as well – opening the door for even more revenue to come in from this drug that just topped $1.1 billion in annual sales last year. That bodes well for continued success for an already high-flying pharma stock.

• Market value: $84.7 billion
• Dividend yield: 4.2%

Gilead Sciences (GILD, $67.56) posted solid earnings in July that prove this is a pharmaceutical stock with the wind at its back. Specifically, GILD saw a 21% year-over-year increase in Q2 revenue, driven by its blockbuster antiviral treatments Veklury and Biktarvy. Plus, GILD recorded impressive operating cash flow of $2.3 billion for the three-month period.

But what's really appealing to dividend-hungry investors is the fact that Gilead hiked its quarterly payout to 71 cents per share this spring, thanks to continued success for its core business. At the current rate, GILD's dividend is up 65% from the 43 cents per share it paid out in early 2016.

On top of that, the current dividend is less than 40% of projected 2021 earnings – and GILD also has $6.8 billion in cash on the books to ensure stability for its operations on top of that. All this points to continued dividend growth ahead.

The icing on the cake is that investors are getting all this for a decent value relative to other pharmaceutical stocks, with GILD boasting a forward price-to-earnings (P/E) ratio of about 10 and a price-to-sales ratio of 3.2.

Given GILD's current share momentum – the stock is up 16% for the year-to-date – a decent dividend growth path and a fairly cheap valuation, it's easy to be attracted to the pharma name.

• Market value: $96.6 billion
• Dividend yield: 5.8%

GlaxoSmithKline (GSK, $38.41) is another one of the cheap pharmaceutical stocks on this list, with a forward P/E ratio of about 12.3. It also has a low price-to-sales ratio of just 2.2 times trailing revenue.

There's reason for that, of course, as some of GSK's core treatments have had to take a backseat thanks to pandemic disruptions. Most notably is its shingles vaccine Shingrix that has been deprioritized in most doctors' offices given the other public health concerns lately.

However, an eventual normalization in healthcare trends along with the anticipated spinoff of the company's consumer health division in 2022 should give GSK a nice tailwind. And an estimated $11 billion to reinvest in its core pharmaceutical and vaccine business as well as the efficiencies of a streamlined operational structure should help, too.

All this is starting to catch Wall Street's eye, as shares have rallied to flirt with their highest levels since mid-2020.

As with AstraZeneca, GSK is a U.K.-based firm and its dividends fluctuate a bit (versus the fixed structure of U.S. dividend stocks). But based on its annual payout, GlaxoSmithKline has a yield that is twice that of many other pharmaceutical stocks on this list.

• Market value: $419.1 billion
• Dividend yield: 2.6%

There's something to like about healthcare powerhouse Johnson & Johnson (JNJ, $159.22) regardless of your strategy right now.

Interested in a play on its single-dose COVID-19 vaccine success? How about a focus on its rock-solid consumer health business built on megabrands like Band-Aid and Tylenol? Or maybe it's the growth potential of JNJ that interests you, with Wall Street's consensus projection for average annual earnings growth hitting about 9% over the next five years despite its already massive scale?

You'd be hard-pressed to find a stock with a richer history, too, or more proof of a commitment to shareholder value. J&J is one of only two S&P 500 companies – multi trillion-dollar tech stock Microsoft (MSFT) is the other one – with a perfect AAA credit rating. Furthermore, JNJ boasts more than $82 billion in annual revenue, currently sits on $25 billion in cash and short-term investments and cleared $22 billion in free operating cash flow last year.

Admittedly, there are things other than branded pharmaceuticals going on here. But for some investors, that diversified revenue is an appealing factor when you compare it with other stocks that live or die based on patent expiration cycles or upcoming FDA approvals.

That stability and reliability has allowed JNJ to deliver at least one dividend increase per year for nearly six decades straight, making it among the rare group of Dividend Kings with the most impressive record of increasing payouts on Wall Street. If you're looking for reliability among pharmaceutical stocks, then JNJ is definitely worth a look.

• Market value: $237.8 billion
• Dividend yield: 3.7%

Pfizer (PFE, $42.42) is one of the best-known pharmaceutical stocks on the planet. This U.S.-based healthcare giant is a Dow Jones stock and has been in operations in some way for roughly 170 years.

But in the here and now, PFE is winning over investors of all stripes because of a high-profile approval for its coronavirus vaccine. This has resulted in mandates for Americans to get their jab, from both governments and private companies looking to put a lid on coronavirus once and for all.

Of course, this news cycle is nice and has helped lift PFE nearly 26% year-to-date. But there is a lot more going for Pfizer in 2021 than just its COVID-19 response.

The stock has a stable of blockbuster drugs making more than $1 billion in annual revenue. These include a pneumonia vaccine found under the Prevnar brand, fibromyalgia treatment Lyrica and the BMY collaboration Eliquis to name a few.

There are also structural improvements at Pfizer worth calling out for the long-term potential in this stock, beyond the grind of its product portfolio. CEO Albert Bourla took the helm in 2018, and under his leadership the company has taken some serious steps into resizing operations.

These include the spinoff of Pfizer's generics and off-patent drugs division in 2020 via Viatris (VTRS), which allows the firm to focus on branded pharmaceutical research. Additionally, there was the move to consolidate some of its consumer health assets like Advil pain relief or Centrum vitamins under a joint venture with GlaxoSmithKline.

And if you're a dividend investor, the icing on the cake is that all this has occurred without a single hiccup for dividends. Pfizer recently announced its 332nd consecutive quarterly dividend will be paid in December. That's more than 80 years of consistent paydays to shareholders of this Big Pharma mainstay.

• Market value: $121.4 billion
• Dividend yield: 4.0%

French pharmaceutical company Sanofi (SNY, $48.37) is a $120-billion drugmaker. It offers a variety of treatments, including drugs that target genetic disorders such as Gaucher disease and autoimmune conditions like multiple sclerosis. SNY's products serve an important niche for many patients around the world.

One recent example is Sanofi's Dupixent eczema treatment, developed in conjunction with Regeneron Pharmaceuticals (REGN). This is the first-ever biologic to show improvements for small children with moderate- to-severe skin conditions.

There's a strong core of underlying vaccines that Sanofi also provides, including influenza and meningitis shots. The pandemic certainly helped prove the value of getting your preventative jabs – and this could help lift SNY's vaccine business in 2022 as folks return to the doctor for more regular visits.

As with the U.K. pharmaceutical stocks on this list, Sanofi doesn't pay fixed quarterly dividends. In fact, it only pays once per year around the end of April or the beginning of May. But based on the most recent distribution of about $1.90 per share, SNY stock yields roughly three times what the typical S&P 500 company does. That could make this dividend stock worth waiting for.

It's no secret that technology is changing every facet of our lives. From how we conduct business to how we shop, tech is everywhere. And that wide reach of technology includes our bodies. Tech is revolutionizing the healthcare sector – and creating opportunities in medical technology stocks.

Dubbed "medtech," this blending of healthcare and technology has already had sweeping effects. Advanced genomic tools allow us to create targeted cancer medicines, new medical devices empower patients to control diabetes with better results; heck, we can even see a doctor virtually or use data to buy health insurance at lower prices. All in all, the blending of technology and healthcare is transforming how we treat and care for our bodies.

And it's been great for investors, as well.

Healthcare has been traditionally one of the more stable and recession-resistant sectors. As we know, technology stocks are often fast-moving. When you combine the two, you get medical technology stocks, which offer stability with a real side of growth. Typically, revenue growth is faster at medtech firms than a traditional drug manufacturer.

And returns have been wonderful, as well. While there's no official index for medtech stocks, there is the iShares U.S. Medical Devices ETF (IHI). This fund owns a host of medical device and medtech producers, and is up a staggering 671% since its inception in 2006 for a 14.4% annual average return. Not too shabby at all.

With that in mind, here are five medical technology stocks for investors looking to capitalize on the growing sector.

Data is as of Sept. 14. Analysts' average long-term growth rate expectations represents the estimated average rate of earnings growth for the next three to five years, and is courtesy of S&P Global Market Intelligence.

• Market value: $46.4 billion
• Analysts' average long-term (LT) earnings growth rate: 18.2%

Cloud computing and software-as-a-service (SaaS) applications have already revolutionized business, finance and entertainment. Veeva Systems (VEEV, $299.01) is doing the same for healthcare.

Founded by former Salesforce.com (CRM) executive Peter Gassner, VEEV has used the SaaS approach to produce various applications for the life sciences and biotech industries, drug producers and hospitals. These cloud solutions include everything from collecting trial data during drug development, customer management services and even ongoing risk management tools for drugs in production. Nearly a thousand clients use VEEV's software, including large-cap firms like Eli Lilly (LLY) and Moderna (MRNA).

One win for Veeva is that healthcare is a very regulated sector. The Food and Drug Administration (FDA) and other international regulatory groups require plenty of data and compliance to get drugs to market and keep them there. Veeva's products make these record-keeping and compliance requirements simple and easy.

This creates plenty of stickiness with its revenues. Just over 80% of its annual revenue for fiscal 2021 came from subscription services. Perhaps even better is that Veeva has been successful in transitioning its clients into other products. In fiscal 2021, VEEV saw a 33% year-over-year jump in revenues as it added new clients and moved older ones into extra products.

What is exciting for Veeva and its potential investors is that the company actually makes money. For the second quarter of fiscal 2022, net income clocked in at $108.9 million. This was a 16.3% year-over-year increase. Cash flows from operations were robust, as well.

As far as medical technology stocks go, this one is in a must-have niche for drug developers.

• Market value: $52.5 billion
• Analysts' average LT earnings growth rate: 17.2%

There's a major epidemic that has swept across the world: diabetes. According to the latest numbers from the Centers for Disease Control and Prevention (CDC), more than 34.2 million people of all ages in the U.S. had diabetes in 2018. That's nearly 10.5% of the total population.

Globally, the International Diabetes Federation estimates that the number of adults with diabetes in 2019 was roughly 463 million. Managing that burden is a major endeavor and medical technology is helping on that front.

One win comes from continuous glucose monitoring (CGM). Here, a sensor is placed on a patient's body and is able to wirelessly send real-time glucose numbers to devices like smartphones and smartwatches. This eliminates the need for painful finger pricks and allows diabetes patients to quickly identify trends and make decisions on needed treatments.

There are a few medtech stocks in the CGM sector, but one of the fastest growing is DexCom (DXCM, $542.23).

DXCM created its first CGM product in 2006 and its latest iteration, the G6, was launched in 2018. The beauty of this device is that it can be paired with an insulin pump to help users more easily manage their diabetes.

Dexcom's strong presence in the CGM market is seen in its financial results. In the second quarter, the company saw a 32% jump in sales to $595.1 million versus a year ago. "Strong new customer additions continue to be the primary driver of revenue growth as awareness of real-time CGM increases," the company noted in its earnings press release.

There's plenty of growth potential, as well. CGM is still in its infancy here in the U.S. and abroad. And while originally designed as a product for Type-1 diabetes, new studies have suggested that CGM has profound effects on Type-2 diabetes care. This could lead to plenty of future sales for Dexcom.

• Market value: $16.0 billion
• Analysts' average LT earnings growth rate: 12.9%

The best medtech stocks use technology to improve processes or reduce the risk to patients. Abiomed (ABMD, $353.53) is a prime example of both.

Many patients needing heart surgery will use a percutaneous coronary intervention (PCI), or, as it was formerly called, angioplasty with stent. Heart surgery is very risky for even the healthiest of patients. But for those who have undergone some major cardiovascular event, surgery can be life-threatening. This is where ABMD comes in.

Abiomed's prime product is the Impella series of heart pumps. These devices help patients undergoing PCI or other heart-related surgeries while reducing risks. The Impella is a minimally invasive device and helps keep blood pressure and blood flow normal during surgery. It also takes the strain off of the heart. Impella pumps are removed after surgery.

Given that heart disease is the number one cause of death in the U.S., ABMD's products are very much in demand. Since 2005, Abiomed's sales have grown at a compound annual growth rate (CAGR) of 25% per year.

An added bonus: ABMD has been profitable since 2012. And with no debt on its balance sheet, the firm's cash balance has exploded over the years. At the end of fiscal 2021, Abiomed had $848 million in cash and investments on its balance sheet – up 30% on a year-over-year basis. That gives it a lot of firepower for research and development.

At 55x forward earnings, ABMD isn't cheap. But given the addressable market and its historic rate of revenue growth, that valuation may just be worth it for this medtech superstar.

• Market value: $21.3 billion
• Analysts' average LT earnings growth rate: N/A

Another plus for medical technology stocks is their ability to reduce costs and time for both consumers and enterprise customers. Take for instance Teladoc Health (TDOC, $133.72).

TDOC is the leading player in the growing field of telemedicine. Users can log in to Teladoc's cloud via a number of devices and speak with a doctor or physician's assistant in real-time, 24/7. Patients can get a diagnosis, requests for referrals or additional testing and they can even order prescriptions. Additionally, the company added programs that send remote monitoring devices, like blood pressure cuffs, to its users in order to get accurate data before Primary Care appointments.

Both patients and employers like the idea. Use of TDOC's services exploded during the pandemic when traditional doctor's offices were reducing the number of patients seen. Moreover, employers have continued to add Teladoc as part of their benefits packages. Since 2016, revenues have grown by a 70% CAGR, while the number of visits has grown 40% annually.

There's still room for additional growth. Teladoc recently launched myStrength Complete, a full-service mental health suite that allows users to access therapists and psychiatrists. New deals with Dexcom, Microsoft (MSFT) and health insurers are designed to add revenues and complimentary products to its mix.

The one caveat to TDOC is that it has yet to turn a profit, so the stock is very much a revenue play at this point. But given its leadership position, first-mover advantage and scope, profits could start materializing sooner rather than later.

And Wall Street pros are certainly bullish on the name, per S&P Global Market Intelligence. The consensus recommendation among the 29 analysts following the stock is Buy, while the average price target is $197.65, representing expected upside 47.8% over the next 12 months or so.

• Market value: $70.2 billion
• Analysts' average LT earnings growth rate: 25.1%

One of the latest trends in drug development happens to be products that use gene sequencing. From custom cancer treatments and those drugs curing rare genetic diseases to diagnostics and testing, gene sequencing makes it happen. And much of that sequencing happens on machines produced by Illumina (ILMN, $448.85).

ILMN is one of the leaders in so-called next-generation sequencing. Skipping the science lecture, next-gen sequencing allows researchers to look at entire genomes or targeted regions of DNA or RNA quickly and at a lower cost than older methods. That means the science that used to take months to do could possibly be done in a day.

Both drug developers and university researchers continue to see the benefit in owning Illumina products, while hospitals, doctor's offices and clinics are now using sequencing for diagnostic testing. The next-generation sequencing market is expected to reach $24.2 billion by 2026, and ILMN is well-positioned to capitalize on that growth.

The firm uses the classic razor-blade model. The sequencers themselves aren't cheap to begin with, but where the Illumina makes its real money is in selling the blades, or, in this case the reagents, flow cells and microarrays. These items are needed to make the sequencer run and they get used up in the process.

In the second quarter, these sorts of consumables made up about 62.5% of Illuminia's total revenue – and sales for them were up 82% year-over-year. ILMN is also very profitable, with adjusted Q2 earnings per share tripling to $1.87 from the year prior. Plus, the company has plenty of free cash flow (FCF), which is the cash remaining after a company has paid its expenses, interest on debt, taxes and long-term investments to grow its business. In the second quarter, Illumina's FCF clocked in at $209 million.

There is significant growth potential for ILMN, too. New diagnostic testing kits, continued genetic drug research and its pending buyout of multi-cancer early detection firm Grail will help boost revenues and profits down the road.

On Wednesday, September 24, the share price of a little-known biotech company based in Amsterdam suddenly surged 247.7%.

The company, uniQure N.V. (QURE), saw its market cap surge to $2.76 billion after it announced positive trial results for its gene therapy treatment targeting Huntington's disease.

Huntington's is a rare but devastating inherited disorder that gradually destroys brain cells, leaving patients with few effective treatment options. Early progress toward a therapy was considered groundbreaking.

The incredible upside of QURE's move highlights the potential for biotech companies when clinical trials succeed. Even before commercialization, positive trial data can send valuations soaring, and in QURE's case, momentum held strong despite a follow-on share offering that diluted existing investors.

But for every QURE, there are many biotechs that go the other way. Years of costly research and clinical trials can end in failure, with stock prices collapsing on disappointing results — or companies simply running out of cash and repeatedly diluting shareholders.

This boom-or-bust dynamic makes biotech stock-picking risky. For long-term investors looking to capture the sector's upside while managing risk, biotech exchange-traded funds (ETFs) can provide far more diversified exposure.

The life cycle of a biotech stock

Investing in biotech can resemble a salmon run, in which only a small fraction make it through. Most begin with an idea or research, form a company and raise money through an initial public offering (IPO) or venture capital.

From there, everything depends on clinical trials.

Phase 1 typically involves 20 to 100 participants, often healthy volunteers or patients with the condition.

It usually lasts several months and focuses on safety and proper dosage.

According to Food and Drug Administration (FDA) data, about 70% of drugs advance to the next stage.

Phase 2 expands to several hundred participants who have the condition. Studies can run from several months to two years.

The goal here is to test whether the drug works as intended while continuing to monitor side effects.

Roughly one in three drugs move on to Phase 3.

Phase 3 scales up further, involving 300 to 3,000 patients.

Trials often last one to four years and are designed to confirm effectiveness, compare results with existing treatments, and carefully track adverse reactions.

Only about 25% to 30% of drugs succeed in moving beyond this stage.

The probabilities are also compounded across phases, which means the funnel narrows quickly. Even though about 70% of drugs clear Phase 1, only a third of those make it through Phase 2, then just a quarter to 30% of those advance beyond Phase 3.

Even passing Phase 3 doesn't guarantee success. Before commercialization, companies must file a New Drug Application with the FDA. The agency reviews clinical results, safety, and manufacturing standards, and approval can take more time — all while expenses keep mounting.

Managing cash is just as critical as producing positive trial results. Biotech companies burn millions each quarter without revenue, apart from grants or partnerships. Many raise money by issuing new shares, which dilutes existing investors. QURE recently did this after positive trial results, taking advantage of elevated prices to extend its runway.

The odds of a drug successfully moving from first-in-human trials all the way to approval are slim, which is why the biotech sector carries such high risk and high reward.

However, biotech firms that clear these hurdles can see enormous upside, either through commercial revenue or acquisition by one of the biotech giants such as Gilead Sciences (GILD), Amgen (AMGN), Regeneron Pharmaceuticals (REGN) or Vertex Pharmaceuticals (VRTX).

These four stocks are large enough to stand on their own, often with cash-rich balance sheets and, in rare cases, dividends. They sometimes partner with smaller firms, such as Vertex's 60-40 revenue split with CRISPR Therapeutics (CRSP) on Casgevy, a gene-editing therapy for sickle cell disease.

This cycle explains the variety of biotech ETFs available. Some emphasize large, established companies with steady pipelines, while others tilt toward smaller, speculative players.

Diversification spreads some risk, but the underlying boom-or-bust dynamic remains.

How we picked the best biotech ETFs

Given the boom-or-bust nature of the sector, prioritizing risk was the first concern in selecting biotech ETFs. That meant culling the most speculative options.

We began by excluding leveraged and inverse biotech ETFs. These are designed to deliver two or three times the daily move of an underlying biotech index, up or down.

While such funds can be useful for traders looking to profit from the sector’s constant news flow and volatility, they're not suited for buy-and-hold investors. They also tend to be expensive, with costs that add up quickly.

High fees were the next screen. Some biotech ETFs charge elevated expense ratios due to their specialization.

For example, funds that only hold clinical-stage companies or that actively screen for cutting-edge innovators, such as Cathie Wood's ARK Genomic Revolution ETF (ARKG), often carry fees exceeding 0.75%. On a $10,000 investment, that’s $75 a year, which compounds over time and drags on returns.

We set a maximum expense ratio of 0.6% for eligible funds.

Finally, we applied our usual criteria for liquidity and stability.

That meant focusing on ETFs with a 30-day median bid-ask spread of 0.2% or less, and with at least $100 million in assets under management to reduce closure risk.

• Assets under management: $5.77 billion
• Expense ratio: 0.44%
• 30-day median bid-ask spread: 0.01%
• 3-year annualized total return: 2.75%

The iShares Biotechnology ETF (IBB) is the largest and most established biotech ETF, tracking the NYSE Biotechnology Index with roughly 250 holdings.

As a market-cap-weighted fund, it tilts toward larger companies, with top positions in Gilead Sciences, Amgen, Vertex Pharmaceuticals and Regeneron Pharmaceuticals.

This bias toward large-cap stocks makes IBB less volatile than many expect from biotech, with a beta of 0.8 compared with the broader market. Investors might also receive sporadic quarterly dividends, though payments are not guaranteed and amounts can vary.

This ETF is best suited for investors who want a broad, "buy the basket" approach to biotech with an emphasis on stability above speculation.

Learn more about IBB at the iShares provider site.

• Assets under management: $344 million
• Expense ratio: 0.35%
• 30-day median bid-ask spread: 0.11%
• 3-year annualized total return: 4.82%

Like IBB, the VanEck Biotech ETF (BBH) is market-cap weighted. But it tracks the MVIS US Listed Biotech 25 Index, which as its name suggests, holds only 25 companies.

The portfolio is concentrated at the top, with Amgen, Regeneron, Gilead and Vertex representing the largest positions. This narrower focus makes BBH more of a direct bet on the biggest names in biotech.

In the past three years, that tilt has helped the fund pull ahead of IBB as smaller firms struggled under higher interest rates and regulatory uncertainty while large-cap leaders held up.

This ETF might appeal to investors seeking large-cap biotech exposure at a lower cost with more stability than broader baskets.

Learn more about BBH at the VanEck provider site.

• Assets under management: $5.77 billion
• Expense ratio: 0.35%
• 30-day median bid-ask spread: 0.01%
• 3-year annualized total return: 2.44%

Unlike IBB and BBH, which are market-cap weighted, the SPDR S&P Biotech ETF (XBI) takes the opposite approach by equal-weighting its holdings. The fund tracks the S&P Biotechnology Select Industry Index, which currently includes 134 companies.

Whether it's a large-cap player such as Regeneron or a smaller firm such as CRISPR Therapeutics, each stock is reset to the same weight at quarterly rebalancing.

This structure tilts the portfolio toward mid- and small-cap stocks and creates a systematic "buy low, sell high" effect, as outperformers are trimmed and laggards are added back.

This ETF is best suited for investors who want to speculate on biotech innovation in a more diversified, rules-based way without having to pick individual winners.

Learn more about XBI at the State Street provider site.

• Assets under management: $1.08 billion
• Expense ratio: 0.54%
• 30-day median bid-ask spread: 0.19%
• 3-year annualized total return: 8.25%

The First Trust NYSE Arca Biotechnology Index Fund (FBT) shows that biotech ETFs can be structured beyond market-cap or equal weighting. It tracks the NYSE Arca Biotechnology Index, which selects 30 companies from the biotech therapeutics and biotech tools and diagnostics sub-industries.

Stocks are ranked based on revenue and R&D spending metrics, then equally weighted with quarterly rebalancing.

This rules-based approach has historically helped FBT outperform more traditional peers like IBB, XBI, and BBH over the past three years.

This ETF is best for investors who want diversified biotech exposure with a fundamentals-driven weighting system. However, there is no guarantee that FBT's more sophisticated methodology will result in future outperformance.

Learn more about FBT at the First Trust provider site.

• Assets under management: $218 million
• Expense ratio: 0.58%
• 30-day median bid-ask spread: 0.148%
• 3-year annualized total return: 4.87%

FBT isn't the only fundamentals-based way to own biotech stocks. The Invesco Biotechnology & Genome ETF (PBE) tracks the Dynamic Biotech & Genome Intellidex Index, which scores companies on factors such as price momentum, earnings momentum, quality, management action and value.

The final portfolio holds 30 stocks, rebalanced quarterly. Despite its sophisticated methodology, PBE has lagged peers such as FBT in performance.

This shows that added complexity doesn't always translate into better results.

Investors should also weigh the higher 0.58% expense ratio against cheaper options such as XBI and BBH, which both charge 0.35%.

Learn more about PBE at the Invesco provider site.

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Dow Jones stocks won't always keep up in a rising market, but you can't beat them when it comes to stability and defense in a down market.

Case in point: the benchmark S&P 500 is up 22% on a price basis since over past 52 weeks, while the "growthier" but riskier tech-heavy Nasdaq Composite has added more than 30%.

Meanwhile, the Dow Jones Industrial Average, that elite list of 30 more mature industry leaders, rose less than 18% over the same span.

You can blame the Magnificent 7 stocks for much of the Dow's lagging ways in the bull market. Of the mega-cap tech names driving so much of the bull market's returns, only Microsoft (MSFT), Apple (AAPL), Amazon.com (AMZN) and Nvidia (NVDA) can be found in the blue-chip average.

The fact that the Dow is weighted by price rather than market cap limits the Mag 7's contributions on the way up, but then it also helps limit any damage on their way down.

That sort of underperformance hurts, but remember that stocks don't always go up. Take 2026, for example. When the market swooned in March, the Nasdaq was off nearly 11% for the year to date at one point, while the S&P 500 shed more than 7%. The more resilient Dow lost 6% at its year-to-date nadir.

That's generally what the Dow is supposed to do. Half of the average's components are low-beta stocks. That means they tend to lag in up markets, but hold up better when everything is selling off.

This low-beta influence can have advantages for long-term investors. After all, as bright a time as it's been for equity investors over the past several years, downside risks very much remain.

A new international trade regime had already injected uncertainty into markets – and that was before the war with Iran threatened to upend the global economy.

Although fears of an economic slowdown are receding, worries about an AI-fueled bubble are rising. BofA Securities recently cut its year-end price target on the S&P 500 to 7,100. That gives the index implied downside from current levels.

Savita Subramanian, head of U.S. equity and quantitative strategy, noted that seven out of 10 of BofA's bear market indicators have now been triggered – a signal that historically matches levels seen right before market peaks.

Should such a change in market fortunes come to pass ... well, that's where Dow Jones stocks come in.

Dow Jones stocks ranked

This collection of industry-leading companies and dividend growth stalwarts with their fortress-like balance sheets can offer relative stability in tempestuous market times.

From the best Dow dividend stocks to the most widely held blue chip stocks, components of the industrial average occupy top spots in the portfolios of hedge funds and billionaire investors.

Warren Buffett's Berkshire Hathaway (BRK.B), in particular, is a huge fan of select Dow stocks.

To get a sense of which Dow Jones stocks Wall Street recommends at an increasingly uncertain time for equities, we screened the DJIA by analysts' consensus recommendations, from worst to first, using data from S&P Global Market Intelligence.

Here's how the ratings system works: S&P surveys analysts' stock calls and scores them on a five-point scale, where 1.0 equals a Strong Buy and 5.0 is a Strong Sell. Scores between 3.5 and 2.5 translate into Hold recommendations.

Scores higher than 3.5 equate to Sell ratings, while scores equal to or below 2.5 mean that analysts, on average, rate shares at Buy. The closer a score gets to 1.0, the higher conviction the Buy recommendation.

In other words, lower scores are better than higher scores.

See the table below for analysts' consensus recommendations on all 30 Dow Jones stocks, per S&P Global Market Intelligence, as of June 9, 2026.

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There are no silver linings to the pandemic. Nevertheless, some stocks and sectors have benefited greatly from the societal changes COVID-19 has wrought. One such success story can be found in the nascent telehealth industry.

Companies that deliver virtual medical appointments, healthcare, healthcare diagnostics and the artificial intelligence and cloud-based services underpinning it all are having a fine 2020. Indeed, most telehealth stocks connecting patients to physicians, insurers, hospitals and health systems have been winners.

And demand is only going up.

According to management consultant McKinsey, 46% of U.S. consumers in April were using telehealth to replace canceled healthcare visits. And the market is only expected to get bigger – much bigger. "The telehealth market by revenue is expected to grow at a CAGR of over 28% during the period 2019-2025," according to ResearchAndMarkets forecasts.

One hurdle for investors to overcome is that when it comes to pure-play telehealth stocks, the pickings are somewhat slim. To that end, we've sorted through the comparatively small telehealth sector to find some of analysts' favorite pure plays.

S&P Global Market Intelligence surveys analysts' stock ratings and scores them on a five-point scale, where 1.0 equals Strong Buy and 5.0 means Strong Sell. Any score of 2.5 or lower means that analysts, on average, rate the stock a Buy. The closer the score gets to 1.0, the stronger the Buy call.

After taking into account analysts' scores, equity research and company fundamentals, we've homed in on five of the best telehealth stocks to play the industry's explosive growth. Just note that many of these stocks are starting to cool off after red-hot 2020 runs. In a few cases, analysts are suggesting you put these stocks on a wish list and wait until additional dips before buying.

Data is as of Nov. 10.

• Market value: $6.2 billion
• Revenues (trailing 12 months): $202.1 million
• Analysts' average recommendation: 2.25 (Buy)

American Well (AMWL, $26.76), which provides online consultations with its physicians around the clock and throughout the U.S., has seen its stock cool off in a big way since its mid-September initial public offering (IPO).

Fresh off a $100 million investment from Alphabet's (GOOGL) Google Cloud business last summer, AMWL more than doubled its $18 IPO price to hit a high of $38.74 in its first three weeks of trading.

The stock has since come down to earth, trading around $27 a share. But that's still a gain of 49% from its IPO.

Analysts (and Google) are fans of the company's size and scalability. American Well (also known as Amwell) has more than 50 health plan partners covering 80 million members. Moreover, it has more than 2,000 hospital and health system partners. Monthly visit volume increased by more than fourfold in the first six months of 2020, while revenue rose 77% to $122.3 million compared with the first half of last year.

However, like with many telehealth stocks, patience might be rewarded on AMWL. UBS advises clients to wait before getting in on the name, saying the current valuation is already pricing in outsized growth.

"While we see potential for AMWL to accelerate growth above our estimates, we think it's challenging to ascribe it as much credit as we think the market is currently factoring in, and therefore wait for a better entry point," notes UBS, which rates the stock at Neutral.

As for the rest of the Street, two analysts rate shares at Strong Buy, two say Buy and four call it a Hold – with several of those latter ratings demonstrating concern about valuation, too.

• Market value: $49.2 billion
• Revenues (trailing 12 months): $1.4 billion
• Analysts' average recommendation: 2.00 (Buy)

M3 (MTHRY, $36.24), an internet-based provider of medical-related services to physicians and other healthcare professionals, has one of the hottest expected growth rates you can find. Indeed, analysts forecast earnings to jump by 30% annually on average over the next three to five years.

No wonder the Street is mostly bullish on this telehealth stock, which trades over the counter in the U.S. Six analysts rate the stock at Strong Buy, three say Buy and four say Hold. One analyst has a Sell rating on shares.

Like many of its peers, shares in M3 have been rallying hard during the pandemic, gaining 72% for the year-to-date. But be forewarned that M3's trajectory has made some analysts cautious of the name on valuation concerns.

After all, earnings trade at 159 times next year's earnings. That is a lot, even after taking the outsized growth rate into consideration. M3, were it in the S&P 500, would roughly be in the top fifth of the index's most expensive stocks. Let MTHRY cool off.

• Market value: $25.0 billion
• Revenues (trailing 12 months): $867.1 million
• Analysts' average recommendation: 1.89 (Buy)

Teladoc Health (TDOC, $172.44), one of Wall Street's best-known telehealth stocks, is one of the biggest beneficiaries of the pandemic-induced move to virtual healthcare.

And consumers appear to be sticking around. The company, which provides virtual healthcare services to a range of stakeholders – including consumers, employers, health plans, hospitals and insurance companies – saw revenue more than double and total care visits triple during the third quarter.

Another way in which TDOC ended the third quarter with a bang was by closing its $18.5 billion acquisition of competitor Livongo at the end of October. The combined company aims to become a one-stop shop for all virtual care needs.

Teladoc stock has more than doubled so far in 2020, making shares look pricey by some measures. Although analysts as a group remain bullish, some say the stock will probably have to rest before its next leg up.

"TDOC remains one of the more compelling growth stories within healthcare and multiple secular drivers should continue to push adoption/utilization of virtual healthsolutions in the coming years," says Baird Equity Research, which rates it at Neutral (Hold). "However, with valuation well above historical averages, we think the stock may consolidate recent gains."

Of the 27 analysts covering TDOC tracked by S&P Global Market Intelligence, 13 call it a Strong Buy, four say Buy and 10 have it at Hold. There are no Sell ratings on shares.

• Market value: $9.4 billion
• Revenues (trailing 12 months): $1.8 billion
• Analysts' average recommendation: 1.75 (Buy)

Cloud-based healthcare services are having their moment in the sun, as artificial intelligence, security and sharing healthcare data become more important in a world of COVID-19.

That has helped make Nuance Communications (NUAN, $33.45), an artificial intelligence firm, one of the more attractive telehealth stocks, analysts say.

"The company overall continues to be laser focused on building a global cloud healthcare and artificial intelligence-driven business as more hospital-wide deployments shift to the cloud," says Wedbush, which rates shares at Outperform (Buy). "We view NUAN as a core healthcare cloud play for the coming years given the next generation technology needs in healthcare (accelerated in this environment) in which Nuance plays into with its strategic initiatives."

Shares in Nuance are up nearly 90% for the year-to-date and analysts think they have more room to run. Although the stock looks pricey – trading at almost 40 times 2021 earnings on a long-term growth forecast of just 8.5% – they seem to believe it can get even pricier.

Four analysts rate shares at Strong Buy, two say Buy and two call it a Hold, according to S&P Global Market Intelligence.

• Market value: $7.2 billion
• Revenues (trailing 12 months): $245.5 billion
• Analysts' average recommendation: 1.64 (Buy)

A supermajority of analysts give iRhythm Technologies (IRTC, $251.08) a big thumbs up. Of the 11 covering the telehealth stock tracked by S&P Global Market Intelligence, six rate it at Strong Buy and three say Buy. Just two analysts have it at Hold.

IRTC specializes in wearable ambulatory biosensor systems. For example, the Zio wire-free electrocardiogram technology allows physicians to monitor patients and diagnose arrhythmias via a cloud-based data analytic platform.

IRhythm's stock really blasted off in 2020, putting up gains of nearly 270% so far this year. The company's hot growth prospects are fueling this excitement, as are its chances of producing some black ink.

Analysts expect iRhythm to swing to profitability in 2022 on the strength of accelerating revenue growth. The top line is forecast to expand by nearly 80% to $472 million in two years from this year's revenue estimate of $263 million. And analysts expect earnings to increase at an average annual rate of 30% over the next three to five years.

William Blair Equity Research, which rates the stock at Outperform, touts IRTC as a "market-disrupting digital health platform."

"The Zio ecosystem – made up of iRhythm's unique patch-based technology, AI-driven algorithm and curated reports – is disrupting the roughly $2 billion U.S. ambulatory cardiac monitoring (ACM) market," William Blair's analysts say. "With new indications and products, and first-mover advantage, we believe its tests can grow 25% to 30% over the next three years and still make up less than 25% of market share."

Some insurers are rolling back the more-generous telehealth benefits they extended to policyholders this spring (see Finding Affordable Health Care Now).

Many insurers have been waiving co-payments or requirements to meet a deductible for virtual visits. But UnitedHealthGroup and Anthem customers were set to face out-of-pocket charges on certain telehealth visits starting October 1.

Insurers are using an array of deadlines, reimbursement strategies and charges, depending on factors such as the type of plan or the purpose of the medical visit. Doctors and hospitals say the complex rules are leading to confusion, and the cost-sharing charges are creating concern that patients who must pay more for telehealth might delay or avoid visits.

It's difficult to get the best of both worlds in mutual funds. Some products might be great for opportunistically chasing growth but just as quickly peel back when investors go risk-off, for instance. Others might hold up well in pullbacks but fail to participate in broad-market rips.

Health care funds, however, can exhibit defensive characteristics and deliver market-beating performance over long bull stretches.

The defensive nature of health care stocks comes from the fact that consumers will generally continue to buy these goods and services that they need, no matter what the economy is doing. The long-term growth aspect is supported by the combination of an aging population and advances in medical science and technology.

For evidence of the short- and long-term dual play for health care funds, look no further than the actual numbers. For the year through Oct. 6, 2020 – a decidedly tumultuous period – the average health care mutual fund had outperformed the S&P 500, 10.9% to 5.5%. Over the past decade, meanwhile, health care funds have averaged 15.5% returns annually, which is more than 2 percentage points better than the broader market.

Where can you find this 1-2 sector punch? Read on as we examine five of the best health care mutual funds for the long run.

Data is as of Oct. 6. Yields represent the trailing 12-month yield, which is a standard measure for equity funds.

• Assets under management: $48.7 billion
• Dividend yield: 1.0%
• Expenses: 0.32%

Let's start with Vanguard Health Care Fund Investor (VGHCX, $218.07), a straightforward but strong choice for investors wanting low expenses, low turnover and below-average risk compared to other health-care funds.

Vanguard Health Care takes a broad approach to health care, investing in various sectors both in the U.S. and abroad. Pharmaceutical stocks make up the biggest chunk of the portfolio at 40% of assets, but VGHCX investors are also exposed to biotech, health care equipment, health insurers and several other industries. Also, a good third of the portfolio is in international stocks.

This blend is well-evidenced in its top 10 holdings, which include the likes of America's UnitedHealth (UNH) and Pfizer (PFE), as well as the U.K.'s AstraZeneca (AZN) and Switzerland's Novartis (NVS).

One caveat for this health care fund is the buy-and-hold approach from Wellington Management, VGHCX's fund advisor. The approach tends to produce average returns compared to its peers. But it does so with a below-average risk profile, and remember: The category average still beats the S&P 500, which is a key goal when you're investing in sector funds.

Consider that VGHCX's 10-year average annual return of 14.9% is about 60 basis points lower than the category average (a basis point is one one-hundredth of a percent). But that's still better than the S&P 500's 13.6% average, and it has come with less volatility.

Learn more about VGHCX at the Vanguard provider site.

• Assets under management: $9.2 billion
• Dividend yield: 0.3%
• Expenses: 0.70%

Fidelity Select Health Care Portfolio (FSPHX, $32.09) is a slight shift from VGHCX, in that it dials up the risk but also produces better returns.

Fund manager Eddie Yoon has been at the helm of FSPHX since 2008; this tenure gives him complete credit for the outstanding 10-year annualized return of 19.2%. His is a three-part strategy that involves investing a heavy chunk of assets into steadily growing companies, then bolstering growth with biotechs as well as other fast-growing firms.

At the moment, this Kip 25 fund boasts 20%-plus allocations to health care equipment, biotechnology and pharmaceuticals, with another heavy slug (19%) in health insurance. The fund is filled out with life sciences, health-care tech and even software companies. You also get some international diversification at about 20% of assets. UnitedHealth, Switzerland's Roche Holding (RHHBY) and COVID play Regeneron (REGN) are all major players in this portfolio.

You'd think the aggressive stance would put Fidelity Select Health Care investors in considerable risk, but Morningstar says risk is about on par with the category average. That's a great tradeoff considering the performance of this Fidelity mutual fund beats at least 80% of health care mutual funds in every significant time frame.

Note: PRHSX's status is "restricted." The fund is open to new investors, but you'll have to buy shares either directly from T. Rowe Price or through financial intermediaries with an existing position.

Learn more about FSPHX at the Fidelity provider site.

• Assets under management: $15.5 billion
• Dividend yield: 0.1%
• Expenses: 0.76%

T. Rowe Price Health Sciences (PRHSX, $94.41) has consistently outperformed its category peers in part because it's not afraid to overweight more aggressive areas of the health care sector.

PRHSX divides the health care sector into five main areas: pharmaceuticals, biotechnology, life sciences, services, and product and device providers. Allocation across these main areas will vary depending upon the potential that management sees with each respective area.

Health Sciences' management has its biggest chunk of assets (35%) dedicated to biotechs – the highest-risk, highest-reward segment of health care. The rest of the portfolio is split into 12%-20% chunks across the other four industries mentioned here. Top holdings are heavy in large caps: UnitedHealth, Intuitive Surgical (ISRG) and Vertex Pharmaceuticals (VRTX) represent some of the health care fund's biggest weights.

PRHSX is a well-above-average fund in most short-term time periods, but it has really shone in the long term. It beats 99% of its peers in the trailing 10- and 15-year periods, with 20.1% and 15.7% average annual returns, respectively.

Note that PRHSX is open to new investors but you'll have to buy shares either directly from T. Rowe Price or through financial intermediaries with an existing funded position.

Learn more about PRHSX at the T. Rowe Price provider site.

• Assets under management: $4.4 billion
• Dividend yield: 0.63%
• Expenses: 0.92%

While Janus Henderson Global Life Sciences T (JAGLX, $67.45) might sound like a fund focused specifically on one corner of the health care sector, it actually provides another means of broad access to several industries.

The JAGLX portfolio consists of companies that the fund management believes can address "unmet medical needs or improving efficiencies." In translation, shareholders of JAGLX get a healthy dose of pharmaceutical companies, biotech firms and medical device companies, including top holdings such as Merck (MRK), AbbVie (ABBV) – both Dividend Aristocrats – and Boston Scientific (BSX).

But biotech is the key to performance here, writes portfolio manager Andy Acker.

"We believe biotech's innovation will only accelerate from here, creating opportunities for investors who can identify the most promising drug developments," he says. "When we look at the Global Life Science Fund's cumulative 10-year return, we see that our positioning in biotechnology has been a key driver of outperformance."

This is a decidedly large-cap fund, with some 40% of the portfolio invested in companies larger than $100 billion. It's also heavily U.S. but with some (20%) international exposure.

From a performance standpoint, JAGLX offers the 1-2 punch that health care mutual fund investors are looking for, with an average risk profile but above-average returns in most time frames.

Learn more about JAGLX at the Janus Henderson provider site.

• Assets under management: $7.3 billion
• Dividend yield: 0.0%
• Expenses: 0.71%

Fidelity Select Medical Technology and Devices Portfolio (FSMEX, $69.52) isn't a sector fund, but instead an industry fund. In short, it focuses on companies dealing in medical equipment and devices (and related technologies), and doing so has helped it produce category-beating returns for some time.

Specifically, some 60% of the fund's assets is invested in health care equipment firms, while another 19% goes toward life sciences tools and services. The rest of the assets are sprinkled among insurers, health care tech, health care supplies and other industries. Top holdings include the likes of Thermo Fisher Scientific (TMO), Becton Dickinson (BDX) and Danaher (DHR).

This is a considerably more concentrated fund, at 47 holdings versus FSPHX's 88, but it still manages to tamp down risk, which Morningstar calls average.

From a performance standpoint, FSMEX has long been one of the best health care mutual funds you can buy. While Fidelity Select Medical Technology and Devices is better than a respectable 36% of its peers over the 52 weeks, at 32% returns, it's in the 90th percentile for all other longer-term time frames.

Learn more about FSMEX at the Fidelity provider site.

Kent Thune held PRHSX and VGHCX in some client accounts as of this writing. This article is for information purposes only, thus under no circumstances does this information represent a specific recommendation to buy or sell securities.

The pandemic has put the health care industry under a global spotlight. Biotechnology and big pharmaceutical firms are front and center as the world races toward a vaccine for COVID-19. There may be many winners, and there may be a few losers, but the current crisis has reminded the world that we are living in a new age of science.

Cures for chronic infectious diseases, targeted cancer therapies and gene editing are just a few of the breakthroughs made in the past decade. And more discoveries are coming. “The speed of science is increasing,” says Joshua Riegelhaupt, assistant manager of Baron Health Care fund. “That’s why we think this is the century of biology,” he says.

These developments are improving the standard of care, says Julia Angeles, an investment manager with a specialty in health care at investment firm Baillie Gifford. “We understand more what drives diseases, and we’re able to develop drugs that are more precise, more efficient and more effective,” she says. The investing landscape is changing, too. Many health care stocks that were once considered defensive, nest-egg investments have morphed into growth stocks. Investors can bank on more change. We are in “the early innings of transformative global change due to innovation in health care,” says Riegelhaupt.

With that in mind, we set out to find stocks poised to follow new approaches in health care that can save costs and improve outcomes.

Stock prices and other data are through June 12.

• Market value: $5,133 million
• Price-earnings ratio: Not material
• Yield: --

Acceleron Pharma (XLRN, $95) already has one drug on the market in partnership with Bristol-Myers Squibb. The treatment, for two blood disorders, is a potential blockbuster. Another drug in late-stage trials could be a big seller, too. It treats pulmonary arterial hypertension, a rare, progressive type of high blood pressure that weakens arteries in the lungs and heart. “Most PAH patients die within five to seven years,” says Baron’s Riegelhaupt. Acceleron’s PAH drug, unlike others that treat only the symptoms, has indicated it can slow the disease by “telling the arterial muscles to relax,” he says.

The risks are high. If clinical trials fail, the shares will suffer. Plus, the company has little in the way of revenue and no earnings. But the firm has low debt and $414 million in cash on the balance sheet. And royalty checks from Bristol-Myers Squibb for the joint-venture drug will help buoy the business, says T. Rowe Price Health Care manager Ziad Bakri.

• Market value: $128,179 million
• Price-earnings ratio: 14
• Yield: 2.9%

The stock price of Amgen (symbol AMGN, $218), the grandfather of biotech companies, is soaring. Like many firms, Amgen is working on a COVID-19 vaccine, which has in part fueled the stock’s rise. It’s also testing Otezla, a psoriasis drug it recently acquired, as a potential COVID treatment. But the firm’s fortunes have also revived thanks to a major cost-cutting push, expansion in China and Japan, and new products on the market, including Kanjinti, for breast cancer.

All told, analysts expect a 9% jump in earnings in 2021 over 2020 levels, and 6% average annual growth over the next five years. That’s considerable, given Amgen’s hefty $128 billion market value. More important, the firm wins an “A++” for financial strength from Value Line. The stock yields 2.9%. At current prices, shares are a bargain relative to peers, at roughly 14 times estimated earnings for the year ahead. Though earnings are in flux across many industries because of the pandemic and the recession, Value Line gives Amgen a top score, 100, for earnings predictability.

• Market value: $66,997 million
• Price-earnings ratio: 12
• Yield: 1.4%

If you know Blue Cross Blue Shield, then you know Anthem (ANTM, $266). It is the largest Blue Cross medical benefits provider, with more than 40 million Americans on its rolls through employer-sponsored plans, Medicare and individual plans. Its diverse client roster gives Anthem “recession-favorable characteristics that have been largely ignored,” says UBS analyst Whit Mayo.

Anthem is a steady business. Over the past 10 years, revenue has increased 6% annualized; earnings, 12%. The firm has strategic initiatives in play to improve results and drive costs down, including its newly launched IngenioRX, a drug benefit management platform, and LiveHealth Online, a telehealth platform. Anthem hopes these moves and others will boost growth in revenue by up to 12% and earnings by up to 15% over the next three years, annualized. Pandemic-related job losses may curb these goals, if the number of insured members on Anthem’s employer-sponsored rolls falls, but Morningstar analyst Julie Utterback still expects low-double-digit annualized earnings growth through 2024.

The shares are a bargain. They currently trade at 12 times projected earnings for the year ahead; peers trade at 18. “The company’s earnings are going to do just fine through this crisis,” says Artisan Select Equity manager Dan O’Keefe. The stock yields 1.4%.

• Market value: $127,095 million
• Price-earnings ratio: 12
• Yield: 3.2%

Drug giant Bristol-Myers Squibb’s (BMY, $56) 2019 acquisition of biotech firm Celgene added $18 billion in debt to its balance sheet, and some investors frowned on the deal. But Celgene has catapulted Bristol’s revenue and earnings to double-digit growth, following static results in recent years. The first three months of 2020, the first measure of the combined company, saw sales jump 82%, thanks mostly to Celgene drugs.

The deal also beefed up Bristol’s pipeline of new drugs and its cancer-treatment portfolio. Morgan Stanley analyst David Risinger says the combined firm has trials underway for treatments for seven cancer types, including lung, bladder and liver cancer, with key results expected in 2020 or 2021. The drugs could bring in $12 billion in annual U.S. sales over the next three to five years.

The stock trades at 12 times estimated earnings—close to historic lows and a discount to the average forward price-earnings ratio of 23 for large drug firms. Plus, the stock yields 3.2%.

• Market value: $7,624 million
• Price-earnings ratio: Not material
• Yield: --

One day soon, a routine Guardant Health (GH, $77) blood test may be able to detect cancer before symptoms appear. “That’s the biggest and most exciting part of the business,” says Kaufman, and it could open a billion-dollar market for the company.

Although that test is still in clinical trials, revenue from Guardant’s other business, precision oncology testing, has doubled every year since 2016. The tests rely on a patient’s blood or urine to help doctors match patients with personalized therapies based on the molecular profile of their tumors.

The company logged $214 million in revenue in 2019, but profits aren’t expected until at least 2022. Even so, Canaccord Genuity analyst Max Masucci says Guardant Health has good long-term growth prospects. In the meantime, the company has no debt and $520 million in cash on its books.

• Market value: $4,318 million
• Price-earnings ratio: Not material
• Yield: --

The science behind Iovance Biotherapeutics’ (IOVA, $30) drugs is “next-wave technology,” says Robert W. Baird analyst Madhu Kumar. The company’s treatments spur your immune system to fight cancer cells.

In the treatment, tumor-infiltrating lymphocytes, which can recognize and kill cancer cells, are removed from a patient’s tumor, grown in a lab, then returned to the patient to help fight cancers. Mid-stage tests of the firm’s treatment for melanoma show that in 30% of cases, the therapy can shrink cancers, “head and shoulders above the 10% standard efficacy rate of other drugs,” says Kumar. The treatment still needs FDA approval, but Kumar says he has “high conviction for success.”

Iovance is a risky bet until the FDA approves the firm’s TIL treatment. But the firm has little debt, and it raised another $604 million in a public offering in June, adding to an existing $245 million cash balance on its books.

• Market value: $26,510 million
• Price-earnings ratio: 26
• Yield: --

Iqvia Holdings (IQV, $139) is a play on biotech advances and technology. Its research-and-development business helps biotech and drug firms as they develop therapies, from clinical-trial design to post-launch monitoring. The tech side offers drug companies ways to measure, analyze and improve efficacy and outcomes, using its cloud-based software.

COVID-19 has disrupted many clinical trials. But CFRA analyst Sel Hardy says Iqvia (pronounced i-Q-via) is one of the “best-positioned clinical research organizations, thanks to its global diversity and leadership position in health care information and technology services.”

One worry: The company has $11 billion in long-term debt. But Hardy expects the firm to deploy its free cash flow—more than $800 million in 2019—to pay that down. And earnings are on the rise. Analysts expect a jump in annual earnings of 20% in 2021 and 11% in 2022. The stock currently trades at 26 times expected earnings, a bit above its average historical forward P/E.

• Market value: $124,917 million
• Price-earnings ratio: 27
• Yield: 2.5%

Medtronic (MDT, $93) is a big kahuna in medical devices. Its broad offerings include products that address cardiac, vascular and neurological disorders, among other ailments. It also makes surgical and surgery products, such as stapling devices and mesh implants.

Competition is stiff, and COVID-19 has delayed nonessential procedures, slowing demand for some Medtronic products. But Medtronic dominates many of its markets, and the pace of elective surgeries is picking up.

Medtronic shares trade at 27 times estimated earnings; the typical medical-products stock trades at a P/E of 36. BofA Securities analyst Bob Hopkins expects Medtronic revenue to jump after 2021, with the launch of a new version of its leadless pacemaker, which will be suitable for a higher number of cardio patients, and the debut of the firm’s long-anticipated robotic-assisted surgery system.

• Market value: $32,534 million
• Price-earnings ratio: 119
• Yield: --

Veeva Systems (VEEV, $217) offers cloud-computing services, among other tech offerings, to health care companies including Eli Lilly, Gilead Sciences and Merck. The stock has soared recently because of high pandemic-related demand for Veeva’s services. Consider buying on a dip.

The firm’s flagship content management system, Vault eTMF, used during clinical trials, is a top choice among drug companies of all sizes, says William Blair analyst Bhavan Suri. It organizes essential documents so that they are always regulator-ready, allowing all participants in the study—drug firms and outside contractors, for instance—to communicate in real time. The system is a launching platform that allows Veeva to cross-sell related data management services. Suri expects earnings to climb by 11% for the fiscal year ending in January 2021, and by 21% for fiscal 2022. Meanwhile, the company is financially strong, with little debt and just over $1 billion in cash and securities.

• Market value: $14,774 million
• Price-earnings ratio: 56
• Yield: 0.3%

West Pharmaceutical Services (WST, $201) makes the thumb-size vials that hold injectable drugs. “These are not commodity products,” says Baron Health Care manager Neal Kaufman, meaning they’re not mass-produced. They have specialty coatings to prevent drug contamination. West dominates many of the markets in which it sells products.

West’s product lineup also includes items for drug delivery and research, including syringes that can be prefilled, auto-injection syringes, and devices used to reconstitute, mix and transfer drugs. Many will be used by various companies to develop a COVID-19 vaccine. With West, you “benefit from the potential for a vaccine without having to place a bet on the winner,” says Kaufman.

The COVID factor has boosted West’s stock, and shares are expensive relative to other medical-products stocks. But Kaufman says the shares could significantly exceed expectations. “This company will generate strong revenue growth for many years to come.”

A fund is a good option for investors who want a lower-risk path to investing in health care stocks. (Returns are through June 12.)

At Baron Health Care (BHCFX, expense ratio 1.10%), manager Neal Kaufman and assistant manager Joshua Riegelhaupt look for fast-growing companies with “open-ended opportunities in large markets and competitive advantages over peers,” says Kaufman. This fund has only a two-year history, but it has returned 16.1% annualized since its launch, which beats the S&P 500 Health Care index. UnitedHealth Group, Abbott Laboratories and AstraZeneca are top holdings.

Fidelity Select Health Care (FSPHX, 0.70%) is a member of the Kiplinger 25, our favorite no-load funds. Since Eddie Yoon took over in 2008, the fund has returned 16.5% annualized, beating the 13.2% average gain for health funds. Yoon invests big slugs in established firms, such as Roche Holdings and UnitedHealth, and boosts returns with light bets (less than 1% of assets each) in burgeoning biotech and medical-equipment stocks.

Ziad Bakri, a former physician, has run T. Rowe Price Health Sciences (PRHSX, 0.76%) since 2016. He focuses on firms that are transforming and improving care, “making leaps in advances in human health,” he says. More than one-third of the fund’s assets are invested in biotech firms. Top holdings include UnitedHealth Group, Vertex Pharmaceuticals and Thermo Fisher Scientific. Over the past three years, Health Sciences has returned 13.9% annualized, ahead of 80% of its peers.

Our favorite exchange-traded fund in this sector is Invesco S&P 500 Equal Weight Health Care (RYH, price $215, expense ratio 0.40%), a Kiplinger ETF 20 member. The fund rebalances quarterly; each stock gets an equal portion of assets. Over the past three years, the ETF has returned 9.1% annualized. ETFs offer investors a way to dive deep into a sector. iShares US Medical Devices (IHI, $256, 0.43%) and SPDR S&P Biotech (XHE, $84, 0.35%) are worth a look. The Medical Devices ETF has a three-year, 16.7% annualized return, which beats 91% of its peers. Top holdings include Abbott Labs and Thermo Fisher. The S&P Biotech ETF has gained 12.8% annualized over the same period, and it counts among its top holdings Quidel, which makes rapid diagnostic tests (including one for COVID-19) and DexCom, a maker of high-tech glucose-monitoring systems for diabetes patients.

Sluggish global growth, the U.S. trade war with China and a stock market that’s up only about 2% over the past year have some investors thinking about playing defense. And few equities are better at adding ballast to a portfolio than the rock-solid dividend growth stocks in the Dividend Aristocrats – companies in the S&P 500 that have raised their payouts every year for at least 25 consecutive years.

Also, few areas of the market hold up as well in downturns as the health-care sector. Put them together – health-care stocks with multiple decades uninterrupted dividend growth – and investors have a recipe for income and lower risk in their equity portfolios.

Six of the elite Dividend Aristocrats can be found in the health-care sector. These stocks, most of which are household names, have hiked their payouts for anywhere from 34 to 57 consecutive years. That’s dividend growth an income investor can count on.

For dividend growth and defense, take a closer look at these six health-care Dividend Aristocrats.

Data and analysts’ ratings are of Sept. 23 unless otherwise noted. Companies are listed by dividend yield, from lowest to highest. The list of Dividend Aristocrats is maintained by S&P Dow Jones Indices. Dividend yields are calculated by annualizing the most recent quarterly payout and dividing by the share price. Dividend history based on company information and S&P data. Dividend-growth streaks include the current year if the company has announced a dividend hike in 2019. Analysts’ ratings provided by S&P Global Market Intelligence.

• Market value: $68.4 billion
• Dividend yield: 1.2%
• Consecutive annual dividend increases: 47
• Analysts’ opinion: 10 strong buy, 3 buy, 7 hold, 0 sell, 0 strong sell

Medical devices maker Becton Dickinson (BDX, $253.43) has been leaning on mergers & acquisitions (M&A) to make hay over the past few years. It bulked up with its 2015 acquisition of CareFusion, a complementary player in the same industry. Then in 2017, it snapped up fellow Dividend Aristocrat C.R. Bard, another medical products company with a strong position in treatments for infectious diseases, for $24 billion.

Becton Dickinson’s wares cover everything from diabetes care to lab automation to vascular surgery and much, much more. And while it is a massive player in the U.S., BDX increasingly expects its growth to be driven by markets outside the U.S., including China. Analysts expect Becton to generate average annual earnings growth of 11.2% for the next three to five years, according to S&P Global Market Intelligence.

Annual dividend increases stretch back 47 years and counting – a track record that should offer peace of mind to antsy income investors. The company has grown its payout by a total of 41% over the past five years, though that pace has slowed a bit more recently. If BDX sticks to its usual script, it should announce its next dividend hike in mid- to late November.

• Market value: $147.0 billion
• Dividend yield: 1.5%
• Consecutive annual dividend increases: 47
• Analysts’ opinion: 11 strong buy, 7 buy, 3 hold, 1 sell, 0 strong sell

Abbott Laboratories (ABT, $83.16) actually split into a pair of Dividend Aristocrats when it spun off AbbVie in 2013. Remaining with Abbott Labs were businesses focused on branded generic drugs, medical devices, nutrition and diagnostic products. Its offerings include some well-known consumer brands such as Similac infant formulas, Glucerna diabetes management shakes and bars, and Pedialyte rehydration solutions. But it’s also involved with devices such as i-Stat blood analyzers and Prodigy spinal cord stimulation (SCS) implants.

Like BDX, Abbott has expanded by acquisition of late. In 2017, it bought both medical-device firm St. Jude Medical and rapid-testing technology business Alere.

Abbott Labs’ roots go back to 1888, and its dividend has been around since 1924. ABT has raised its dividend for 47 straight years, including a hefty 14.3% hike that went into effect in February 2019.

• Market value: $148.7 billion
• Dividend yield: 2.0%
• Consecutive annual dividend increases: 42
• Analysts’ opinion: 12 strong buy, 7 buy, 9 hold, 0 sell, 0 strong sell

Medtronic (MDT, $110.84), one of the world’s largest makers of medical devices, is an income machine. The company’s dividend per share has increased 77% over the past five years, Medtronic notes, and has grown at a 17% compounded annual growth rate over the past 42 years. Most recently, in June, MDT lifted its quarterly payout by 8% to 54 cents a share to maintain its spot in the Dividend Aristocrats.

Medtronic aims to return at least 50% of its free cash flow to shareholders through dividends and stock buybacks. The company can steer all this cash back to shareholders thanks to the ubiquity of its products. Medtronic holds more than 4,600 patents on products ranging from external defibrillators to replacement heart valves to surgical stapling devices.

Whether you’re in the U.S. or in about 160 other countries, if you take a look around your hospital or doctor’s office, chances are good you’ll see a Medtronic product.

• Market value: $347.7 billion
• Dividend yield: 2.9%
• Consecutive annual dividend increases: 57
• Analysts’ opinion: 4 strong buy, 5 buy, 9 hold, 1 sell, 1 strong sell

Johnson & Johnson’s (JNJ, $131.74) roots stretch back to the 19th century, and it remains one of the country’s leading health-care stocks, on several fronts. Chances are you know J&J for its consumer brands, which include Band-Aid, Neosporin, Listerine, Clean & Clear, and of course Johnson’s baby products. But it also has pharmaceutical products, through its Janssen and Actelion arms, and it manufactures medical devices used in surgery.

From the occasional disappointing results to litigation, Johnson & Johnson has had its ups and downs over the years. But so far, that has not affected investors who count on JNJ’s steady dividend. The health-care giant hiked its payout by 5.6% in April 2019, extending its streak of consecutive annual dividend increases to 57.

That should continue if Johnson & Johnson can keep growing its earnings; analysts expect it to, at a clip of 6.9% annually on average over the next three to five years.

• Market value: $13.8 billion
• Dividend yield: 4.1%
• Consecutive annual dividend increases: 34
• Analysts’ opinion: 1 strong buy, 2 buy, 14 hold, 1 sell, 2 strong sell

Cardinal Health (CAH, $47.17), like other health-care stocks on this list, became the giant that it is today in decent part thanks to a steady stream of acquisitions.

More recently, it has been embroiled in legal actions related to the nation’s opioid epidemic. In late 2016, Cardinal Health agreed to pay $44 million to the Department of Justice to settle allegations that it failed to report suspicious drug orders. And in early 2017, the company agreed to a $20 million settlement with the state of West Virginia. The company warned in August that it expects to have to defend itself against more litigation, too.

However, Cardinal Health is looking for new life with its $6.1 acquisition of Medtronic’s Patient Care, Deep Vein Thrombosis and Nutritional Insufficiency business, completed in July 2017.

On the dividend front, CAH has upped the ante on its annual payout for 34 years and counting. The company remains in the Dividend Aristocrats courtesy of its last dividend hike – a 1% bump to 48.11 cents per share announced in May.

• Market value: $107.8 billion
• Dividend yield: 5.9%
• Consecutive annual dividend increases: 47
• Analysts’ opinion: 5 strong buy, 1 buy, 6 hold, 0 sell, 0 strong sell

If you read closely above, you’re now familiar with AbbVie’s (ABBV, $72.93) corporate heritage. But a quick reminder: It was spun off from Abbott Laboratories in 2013.

AbbVie is a biopharmaceutical company with a laundry list of treatments that include Humira for rheumatoid arthritis; AndroGel, a testosterone replacement therapy; and Viekira Pak for hepatitis C. All told, AbbVie’s product pipeline spans 50 total indications – 14 approved, and 36 still in trial stages. But AbbVie also is looking to grow via M&A. In June, the company announced a $63 billion deal to buy Dublin-based Allergan (AGN), which is famous for the Botox brand but also boasts Restasis eye drops, irritable bowel syndrome treatment Linzess and “fat freezing” technology CoolSculpting.

After the split, AbbVie and Abbott Laboratories both retained credit for the longstanding dividend-growth streak. Including its time as part of Abbott, ABBV upped its annual distribution for 47 consecutive years, with the last hike (an 11.5% increase) coming in February.

Health care stocks cover a lot of bases. They’re defensive because people always need medicine and medical care. They’re fast-growing because innovative treatments are powering profits at several drug companies. And now, they’re cheap, too.

Scrutiny of the health care system is high, thanks in part to the upcoming 2020 presidential election, and that has weighed on the sector’s stocks. From talk of Medicare for All to legal challenges to the Affordable Care Act to proposed drug-price regulations, “there’s a lot of political noise,” says Baron Health fund manager Neal Kaufman. As a result, shares in many good companies that were once expensive are now a bargain. “This is a great opportunity to buy stocks that are being punished unnecessarily,” Kaufman says.

Few industry watchers believe Medicare will be nationalized. What will happen with the ACA or drug pricing is harder to predict. Even so, some pockets of the health care sector face greater uncertainty as the debate continues. Hospitals and businesses focused solely on insurance, for instance, would be at risk in a single-payer system.

But an aging population and the breakneck pace of drug innovation bode well for other parts of the sector over the long term. The Food and Drug Administration approved more new drugs in 2018 than in any year before. Just as the internet disrupted multiple industries, including tech and retail, “health care is on the verge of initiating significant change,” says Gary Robinson, a co-manager of Baillie Gifford U.S. Equity Growth Fund, which is available in many U.S. retirement plans

To cash in on these long-term trends, we scoured the sector and found eight good opportunities. The stocks we like fall into three broad health care areas: drugmakers, health care service providers, and medical device and equipment manufacturers. Their share prices may continue to bounce around, especially as we near the 2020 elections. Smart investors will buy more when shares dip. “If you have flexibility and you can pick your spots, you can make money,” says Matt Benkendorf, chief investment officer at money management firm Vontobel Quality Growth. (All returns and data are through June 14.)

Drugmakers

Half of all health care stocks in the U.S. are drugmakers. They include big pharmaceutical firms and older biotechnology companies that are steady growers and pay dividends, as well as smaller, faster-growing biotech firms with one or two products on the market and riskier outfits with no commercial products yet.

The lines are starting to blur as the traditional pharma firms, which combine chemicals to make drugs, and the biotech companies, which tap organic elements such as cells to create therapies, are coming together through mergers, acquisitions and partnerships to cash in on drug innovation. Gene sequencing and other advancements have changed the way we treat cancer, congenital diseases and other ailments, and “the level of innovation is accelerating,” says Damien Conover, Morningstar’s director of health care stock research.

Figuring out which companies will thrive, however, can be tricky. A good drug company has two key attributes: a stable of drugs with patent-expiration dates that are years away, and a fat pipeline of new drugs nearing FDA approval. But drugs and the diseases they treat are complicated. And success often breeds stiff competition. “Behind a lot of blockbusters are a lot of fast followers,” says Jim Golan, comanager of William Blair Large Cap Growth fund.

It doesn’t help that drug prices are under a microscope. Thanks in part to the current administration’s efforts to lower the price Medicare customers pay for some drugs, “the pricing power of pharma firms has been stopped,” says Edward Yoon, manager of Fidelity Select Health Care Portfolio. That’s one reason Yoon, among others, eschews big pharma in his fund. Still, big drugmakers with a slew of products will weather changes in pricing and reimbursement better than companies with thin product lines. Smaller outfits that offer life-transforming drugs for rare diseases may also come through with less damage.

Merck (symbol MRK, price $83) is an elder statesman in the pharma world that should continue to thrive in the new order. Keytruda, Merck’s immunotherapy drug that basically gets the immune system to kill cancer cells, is “rapidly becoming one of the largest products we’ve ever seen,” says JPMorgan Chase analyst Christopher Thomas Schott. The drug is currently approved to treat 11 types of tumors, including advanced non-small-cell lung cancer and melanoma.

In the drug world, a medicine is a blockbuster if it surpasses $1 billion in annual sales. Last year, Keytruda hit $7 billion. Morningstar expects it to reach $16 billion in 2022. And that number could rise. Scientists are testing Keytruda, alone and in combination with other therapies, for dozens of diseases in more than 1,000 studies. And Merck has time to cash in. The oldest patent on Keytruda doesn’t expire until 2028.

Merck also makes vaccines that are big cash generators and are less subject to drug-pricing pressures. In 2018, sales of Gardasil, the cervical cancer vaccine, jumped 37% from the year before to hit $3.2 billion. The firm also has an animal health unit, which doesn’t suffer from the regulatory uncertainty that vexes the human side of the business. The pet and livestock business represents only 10% of the company’s overall operations, but it’s growing faster than Merck’s drug unit.

Merck shares trade at 16 times estimated 2020 earnings—a premium to shares of its large-company pharmaceutical peers, which trade at an average of 14 times 2020 earnings. But Merck is growing faster. Over the next three years, analysts expect earnings to increase 8.9% per year, on average, which is better than the 8.2% rate of other large pharma firms.

Biotech company Vertex Pharma­ceuticals (VRTX, $170) has a lock on treatments for cystic fibrosis, or CF, a rare lung disease caused by a gene mutation. The company’s drugs are transformational. CF treatment was once limited to alleviating the symptoms of the disease. But Vertex’s therapies treat the underlying cause of the disease by trying to allay the gene mutation. Of the estimated 75,000 CF cases worldwide, Vertex makes three drugs that treat 34,000 cases.

Its reach is expanding. The company has a new drug referred to as the “triple combination,” which is expected to win approval in the U.S. in 2020 and could nearly double the number of CF cases Vertex treats, says CFRA analyst Kevin Huang. “With the likely approval of the triple, Vertex would cement its dominant position as the only real player in developing targeted therapy for CF,” says Credit Suisse analyst Evan Seigerman.

In the meantime, the business is healthy. Vertex has $3.2 billion in cash and little debt. Analysts expect Vertex earnings to increase an average of 22.5% per year over the next three years, way ahead of the average 17.8% growth rate for its peer group, biomedical-genetics drug companies.

A smaller biotech firm with no profits—yet—fills out our drugmaker favorites. Neurocrine Biosciences (NBIX, $84) is expected to be profitable in 2020. It has two drugs on the market and a strong pipeline of therapies in all stages of development. One of its commercial drugs, Ingrezza, is a “best in class” therapy for tardive dyskinesia, a condition that causes jerky, involuntary face and body movements, says Credit Suisse’s Seigerman. He thinks it could fetch annual sales of $2 billion by the early 2020s.

Neurocrine also has Orilissa, a drug for endometriosis pain, which Seigerman believes could be a market leader. Neurocrine won’t rake in every dollar made on Orilissa sales, because the firm partnered with AbbVie to market the drug, but it will earn a meaningful royalty. Neurocrine is Seigerman’s top pick in the small and midcap biotech category. He expects strong revenue growth of 31% annualized over each of the next five years.

Health care services

We’re in the early days of a revolution that could one day lower overall health care costs for everyone. In today’s health care system, a doctor and a hospital are most often paid to treat a patient who already suffers from an illness. In the future, prevention and continuing care—some call it holistic care—will take precedence.

The new health care model will only work if every p in the system—patients, providers (doctors, hospitals) and payers (insurers)—work together to make good decisions early, so healthy patients can stay well, and out of the hospital, longer. A healthier population, the theory goes, will lead to fewer dollars overall spent on health care.

It’s happening already in a handful of U.S. cities, including Austin, Denver, and parts of Ohio and Florida, says Yoon. In those areas, hospital admission rates and emergency room visits per 1,000 people (industry measures of the quality of care) have dropped significantly due to the alignment of the p’s. Costs have come down, too, he adds. But it could be a generation before we see change on a national level. “What works in Texas may not work in New York. My expectation is that it will happen eventually, but it will take longer than anyone wants,” says Yoon.

UnitedHealth Group (UNH, $245) stands at the center of this long-term trend. UnitedHealth has a stake in every p. Being the biggest health insurer in the country makes it a payer. It’s a provider through its OptumHealth division, which offers medical services at urgent-care clinics and walk-in surgical-care centers. And its 50 million insured members are patients. UnitedHealth is essentially a microcosm of the country’s health system.

OptumInsight is UnitedHealth’s secret weapon. The business unit collects and analyzes treatment data that can be used to improve health care outcomes, thus lowering medical bills. “You call your insurer,” says Andrew Adams, lead manager of Mairs & Power Growth fund, “and they’ll have your entire medical history. Based on records from doctors, drug prescriptions and hospital records, they’ll know the best course of action to deliver care to you more efficiently.” At least, that’s the idea.

CVS Health (CVS, $54) aims to give UnitedHealth a run for its money. It’s best known for its drugstores—70% of people in the U.S. live within three miles of a CVS pharmacy—but it operates more than 1,000 walk-in clinics, too. With its acquisition of Aetna in late 2018, CVS is now also an insurer.

Both stocks are bargains. UNH shares trade at 16 times estimated earnings, a level not seen since 2014 and a rare discount for these premium shares. “UnitedHealth has always been expensive,” says Mairs & Power’s Adams, who loaded up on more shares when the stock sold off in early 2019. Analysts expect 12.7% annualized earnings growth over the next three years.

CVS took on debt to acquire Aetna for $70 billion, and consequently it did not raise its dividend in 2018, ending a 14-year record of consecutive annual increases. The integration of Aetna and the debt paydown will take time, says CFRA’s Huang. (The completed merger has been challenged in court, but Huang expects the deal to remain mostly intact.) He rates the stock a “strong buy,” in part because at the current price, it’s a bargain. It trades near its 52-week low, sporting a 3.7% yield, and has a price-earnings ratio of 8—more than 40% below the stock’s median historical P/E of the past 10 years. Meanwhile, earnings are expected to increase by an annualized 7.2% over each of the next three years.

Medical devices

Drugmakers are spending gobs of money to research and develop innovative therapies. Life sciences tool companies—a subset of the medical-devices industry—make “the picks and shovels” that enable that effort, says Jason Kritzer, comanager of Eaton Vance Worldwide Health Sciences fund. Analysts expect companies in this group to increase earnings over the next three years at a rate of 12% to 14% per year, on average, compared with 10% for companies in Standard & Poor’s 500-stock index.

Size helps in the medical device world. A lack of funding has, in part, made it difficult for small device companies to survive on their own, and most are acquired by large companies. Accordingly, our favorites have heft in their favor.

Thermo Fisher Scientific (TMO, $285) is a big kahuna in the life sciences industry. Record spending on biotech-drug research is fueling demand for the company’s lab products and services, gene-sequencing instruments, analytical tools, and diagnostic kits. More than 80% of its revenue is tied to recurring sales of its consumable products (syringes, diagnostic tests and other single-use items) and services, says Chris Smith, manager of Artisan Thematic fund. That makes the company less vulnerable to economic swings, says Smith. Meanwhile, Thermo leads the sector in sales and earnings growth that is internally driven (and not attributable to acquisitions, say). Moreover, he adds, “we think TMO has the best management in the industry.”

Analysts expect 12.5% profit growth annualized over the next three years. The stock trades at 23 times estimated earnings, compared with an average multiple of 36 for its peers in the medical instruments market.

After spinning off its drug division in 2013, Abbott Laboratories (ABT, $82) now focuses on a diverse roster of products that includes nutritional drinks, diagnostics, generic drugs and medical devices. But a trio of new products put it in the sweet spot of the health care sector’s innovation surge, says William Blair’s Golan.

One is FreeStyle Libre, a 14-day wearable continuous glucose monitor that does away with finger pricks and tracks patterns and trends over time, helping patients manage their diabetes better. Another is MitraClip, a device that allows patients with a certain heart condition to get treatment with less-invasive surgery (in other words, not open-heart surgery). It has no competition, says William Blair analyst Margaret Kaczor, and a recent FDA decision doubles the number of eligible patients for the device. The third of the trio, Alinity, is a next-generation diagnostic system that integrates and streamlines the workflow of a diagnostic lab, using analytics and automation to standardize research processes, reduce costs and manage labor constraints.

Abbott proves that even giant companies can be innovative. More than 50% of the firm’s sales come from products that launched within the past six years. Analysts expect annualized profit growth of 12.3% over each of the next three years.

Intuitive Surgical (ISRG, $497) is a leader in minimally invasive, robot-assisted surgery. Surgeons perform operations—urological and gynecological procedures, among others—using the company’s technically advanced instruments and 3D, high-definition vision capability known as the da Vinci system. “This market is in its infancy,” says Samantha Pandolfi, a comanager of Eaton Vance Worldwide Health Sciences. Of the 60 million general surgical procedures performed worldwide last year, almost a million were conducted with the da Vinci system. “There’s a long runway for growth, and the company’s lead over the competition is wide,” she says. “We think it can sustain double-digit sales and earnings growth for a very long time.” Analysts, according to Zacks Research, expect 12.2% earnings growth, on average, over each of the next three years.

Invest with a specialist

The outcomes for small, go-go biotech firms can be extreme—you either win big or you lose everything—and the work they do is complex. You might appreciate a fund with an expert at the helm who has the experience and resources to understand and weigh the risks.

Ed Yoon has been analyzing health care companies for over a decade, and has run Fidelity Select Health Care Portfolio (FSPHX) since 2008. The fund has delivered above-average returns with below-average volatility under Yoon; its 10-year, 18.3% annualized return beats 90% of all health care funds. Yoon takes big stakes in steady, large companies that provide ballast for the smaller bets he makes on burgeoning biotech firms. Biotech firms, health care services companies (including insurers), and medical instruments and device makers represent the biggest chunks of the fund.

As manager of Janus Henderson Global Life Sciences (JAGLX), Andy Acker has been researching health care companies for more than two decades (he comes from a family of physicians, too). He spreads his investments across the sector, keeping one-third of the portfolio in drugmakers, one-third in biotech firms, and the rest in health care services and medical devices. Over the past 10 years, Janus’s annualized return beat 78% of its peers.

If you are looking to diversify your portfolio away from trade-war jitters and earnings volatility, consider the highly lucrative health care sector.

Most of the sector’s companies don’t fall under the tariffs being threatened on all sides. Indeed, the health care sector – as measured by the Health Care Select Sector SPDR (XLV) – is the third best-performing sector so far in 2018, behind technology and consumer discretionary stocks. From a breadth perspective, health care trailed only technology as of mid-July, with 67% of its components posting gains since the start of the year.

Another attractive feature is health care’s “pop” potential – prices can surge on the back of positive clinical trial data or key regulatory approvals.

However, prices can plunge just as quickly if data or decisions disappoint. That’s why investing in the health care sector requires some savvy analysis first. TipRanks market data can help, as it allows you to tune into the experts’ takes.

Here are seven promising health care stocks to buy, according to Wall Street’s pros. Each of these stocks has a “Buy” or “Strong Buy” analyst consensus rating and juicy upside potential, with analysts believing some could double or more.

Data is as of July 26, 2018. Consensus price targets and ratings based on “Best Performing” analysts. Stocks are listed in alphabetical order.

• Market value: $579.4 million
• TipRanks consensus price target: $21.25 (100% upside potential)
• TipRanks consensus rating: Strong Buy (See Details)
• Akebia Therapeutics (AKBA, $10.63) is on the cusp of big growth. The company has just announced plans to merge with Keryx Biopharmaceuticals (KERX). Both Akebia and Keryx are developing drugs for adults living with iron deficiency anemia and chronic kidney disease. Indeed, Keryx boasts the only oral treatment option available today, known as Auryxia. Meanwhile, Akebia’s vadadustat is currently in Phase 3 clinical trials.

“Bringing together the commercial infrastructure of Keryx along with the R&D capabilities of Akebia is a sound strategic decision in our view, especially given the complementary nature of both company’s products,” writes top Mizuho Securities analyst Difei Yang (view Yang’s profile and recommendations). She has a $21 price target on the stock, suggesting share prices can roughly double.

Similarly, Piper Jaffray’s Christopher Raymond believes we are now looking at a “significant opportunity” to own Akebia before the “real potential of a nephrology powerhouse with both Auryxia and vadadustat (becomes) more apparent.” This is especially true now that new survey data shows that Auryxia “has not just turned a corner, but is really on quite a roll, both in terms of the drug’s perception and its market share dynamics.”

His $22 price target indicates massive upside potential of 107%.

• Market value: $209.4 million
• TipRanks consensus price target: $38 (262% upside potential)
• TipRanks consensus rating: Moderate Buy (See Details)

If you are looking for a stock with extreme upside potential, Allena Pharmaceuticals (ALNA, $10.50) may do the trick.

Top Wedbush analyst Liana Moussatos (view Moussatos’ profile and recommendations) has just reiterated her “Buy” rating on Allena Pharmaceuticals, giving it a $38 price target.

Allena Pharmaceuticals is looking to develop oral enzyme therapeutics to treat patients with rare and severe metabolic disorders. These can cause kidney stones, potentially leading to chronic kidney disease or renal disease. Its lead product candidate is ALLN-177 for hyperoxaluria, which currently has no approved therapy options. For ALLN-177 in enteric hyperoxaluria, Moussatos projects peak worldwide gross sales of $2.2 billion in 2027.

“With a strong cash position, on-track execution of clinical trials by management and a material clinical catalyst in 2018, we view ALNA shares as attractive investment” Moussatos writes. She is looking for two key milestones for ALLN-177 in the second half of this year: namely, the initiation of the Phase 3 URIROX-2 trial, and interim results from the Phase 2 basket trial, Study 206.

• Market value: $220.4 million
• TipRanks consensus price target: $38.60 (171% upside potential)
• TipRanks consensus rating: Strong Buy (See Details)

Is Galmed Pharmaceuticals (GLMD, $14.24) the surprise success story of 2018? In the last three months, this stock has exploded by nearly 130%. The catalyst: the release of much-anticipated one-year biopsy results for NASH (non-alcoholic steatohepatitis, a type of fatty liver disease) for its lead drug Aramchol.

“The Sleeper NASH Readout of 2018 Has Awoken; Heading to Phase 3” applauded to H.C. Wainwright analyst Ed Arce (view Arce’s profile and recommendations) post-results. “We view Aramchol’s result on ‘NASH resolution without worsening of fibrosis’ as unequivocally positive,” Arce writes. Most impressively, safety remains “squeaky clean,” and this sets Aramchol apart from many other NASH therapeutic candidates. He now sees the critical Phase 3 initiation trials taking place in early 2019.

Arce ramped up his price target to a bullish $43, implying the stock could triple from current prices. He increased his probability-of-success estimate on NASH from 30% in the U.S. to 55%, and from 20% in the European Union to 40%.

• Market value: $2.2 billion
• TipRanks consensus price target: $85.00 (98% upside potential)
• TipRanks consensus rating: Strong Buy (See Details)
• Global Blood Therapeutics (GBT, $42.95) not only has nine back-to-back buy ratings, but the average analyst price target implies a near-doubler from current prices.

GBT is developing its late-stage product candidate, voxelotor, for the treatment of sickle cell disease (SCD). Top-rated Oppenheimer analyst Mark Breidenbach (view Breidenbach’s profile and recommendations) has recently selected GBT as his Top Biotech Stock for July-August. He writes, “We rate GBT Outperform based on our optimism that the company’s Phase 3 asset, voxelotor, could find regulatory and commercial success in sickle cell disease (SCD) and may substantially improve the standard of care in this indication.”

He also says that, based on recent M&A activity and interest in SCD, GBT could find itself a takeout target this year, which would push shares substantially higher.

Although Breidenbach’s price target of $76 falls below the consensus, it still represents significant upside potential of 77%.

• Market value: $7.0 billion
• TipRanks consensus price target: $221.25 (45% upside potential)
• TipRanks consensus rating: Strong Buy (See Details)

Biopharma stock Sage Therapeutics (SAGE, $152.64) is a firm analyst favorite. In the past three months, Sage has received eight buy ratings and no hold or sell ratings. The company is committed to developing novel medicines to transform the lives of patients with central nervous system (CNS) disorders. This includes widespread disorders like postpartum depression (PPD), bipolar depression and insomnia.

Canaccord Genuity’s Sumant Kulkarni (view Kulkarni’s profile and recommendations) is excited about the potential of SAGE-217 for major depressive disorder (MDD). “We view SAGE-217 as a potential game changer if the company successfully demonstrates that depression can be treated episodically vs. current practice that relies on chronic treatment” writes Kulkarni.

He adds: “While postpartum depression presents unmet need, we continue to believe SAGE-217 for the MDD indication is the main stock driver.” Nonetheless he predicts that “the availability of data in the ongoing pivotal PPD trial for SAGE-217 in (the fourth quarter of 2018) as a larger stock catalyst.”

Kulkarni has just ramped up his success probability for SAGE-217 in both PPD and MMD from 50% to 55%. His price target has grown, too, from $210 to $220, suggesting 44% upside potential.

• Market value: $78.2 million
• TipRanks consensus price target: $5.83 (241% upside potential)
• TipRanks consensus rating: Strong Buy (See Details)

Aventis spinoff Scynexis (SCYX, $1.71) is a riskier stock than the rest of these because of its low nominal price – at less than $2 per share, SCYX falls beyond most thresholds for institutional buying, and it’s close to the $1 level that the Nasdaq requires to remain on the exchange.

That said, more aggressive investors should be heartened by the positive analyst activity around Scynexis recently. Three analysts have published buy-equivalent ratings on the stock over the past few weeks.

Needham Group’s Alan Carr (view Carr’s profile and recommendations) recently upgraded the stock from “Hold” to “Buy.” His new bullish rating comes with a $5 price target, suggesting prices can spike 190% from current levels.

So what has prompted this shift in sentiment? Well, the company has just announced positive results from a Phase 2b trial of its lead drug, oral SCY-078 for serious fungal infections. This has caught Carr’s attention for two reasons. First of all “GI tolerability appears acceptable, a key concern from previous Phase 2a trial.” And secondly, he notes that current treatment options leave a lot to be desired, which bodes well for the drug’s potential demand levels.

He writes: “We reported results of our ObGyn survey in a preview note indicating strong interest in a new oral agent. Roughly 15% of patients return due to treatment failure and fluconazole is currently the only oral option available.” As for next steps, Scynexis plans to initiate two identical Phase 3 trials testing how the drug performs vs placebo, by the end of 2018.

Carr is assuming a new drug application (NDA) submission in the second half of 2020, and a launch in 2021.

• Market value: $166.3 million
• TipRanks consensus price target: $30.67 (335% upside potential)
• TipRanks consensus rating: Strong Buy (See Details)

Cutting-edge biotech company Syndax Pharmaceuticals (SNDX, $7.05) is developing an innovative pipeline of combination therapies in multiple cancer indications. And right now, Wall Street thinks this stock is primed to triple. One potential catalyst: Critical data from Phase 3 trials for a breast-cancer treatment is due in the third quarter.

Most recently, five-star HC Wainwright analyst Edward White (view White’s profile and recommendations) initiated coverage of Syndax with a $30 price target (303% upside potential). He sees the company’s lead product Entinostat as offering a “promising syntax” for cancer treatments. The drug functions as a small-molecule inhibitor that has direct effects on both cancer cells and immunosuppressive cells, potentially enhancing the body’s immune response to tumors.

Several bullish factors are already at play, including the drug’s long half-life (which potentially reduces dosing frequency and adverse events) and the fact that the FDA has already ascribed Breakthrough Therapy designation following positive Phase 2 trial results. The bottom line for White: SNDX remains a “compelling investment” at current levels.

TipRanks.com offers exclusive insights for investors by focusing on the moves of experts: Analysts, Insiders, Bloggers, Hedge Fund Managers and more. See what the experts are saying about your stocks now at TipRanks.com.

Health care stocks – and pharmaceutical makers in particular – recently dodged a bullet when President Donald Trump unveiled a relatively benign overhaul to the nation’s health care system with the ultimate aim of lowering costs to costs.

Granted, the industry isn’t entirely sure what bullet it dodged, in that these companies weren’t sure what was in the works. The specifics of Trump’s plans have yet to be fully fleshed out, too. But the fact that the conversation took place at all underscores the notion that many, many eyes are scrutinizing the sector’s healthy bottom lines.

What if, however, there was a sliver of the health care sector that really was relatively immune to the politicization of the business, and was resistant to economic cycles?

As it turns out, there is.

No company is outright bulletproof. However, a wide swath of these organizations are amazingly reliable revenue and profit producers. Here’s a closer look at 10 top health care stocks you can count on in good times and bad.

Data is as of May 23, 2018. Dividend yields are calculated by annualizing the most recent quarterly payout and dividing by the share price.

• Market value: $158.9 billion
• Dividend yield: 3.2%

It’s predictable, almost to the point of being cliché, to peg drugmaker Merck (MRK, $59.17) as one of the health care sector’s most reliable names. But it’s big for a reason, and it has been around forever for the same reason: Merck’s drug portfolio is arguably more diversified than any other pharma company’s, and it’s constantly refreshing its menu.

The hard numbers: During the first quarter of 2018, Merck drove $10 billion worth of revenue. Its best-selling drug, cancer treatment Keytruda, saw triple-digit year-over-year sales growth, yet still accounted for a little less than 15% of the company’s total sales. Type 2 diabetes treatment Januvia made up about 14% of its total revenue, and the remainder of its sales were rather well divvied up among eight other drugs. Also, 20% of Merck’s business comes from the animal-care market. This diversity translates into consistency.

But don’t think for a minute that Merck can’t brilliantly swing for the fences when the opportunity is right. It joined the Schering-Plough pipeline when it acquired Organon back in 2007, which became part of the Merck pipeline when it bought Schering-Plough back in 2009. In neither instance was Keytruda a touted selling point, but Merck seemed to spot its true blockbuster potential early on.

• Market value: $233.6 billion
• Dividend yield: 1.2%

Which health care stocks are best positioned to perpetually capitalize on the need for medical care? The proverbial gatekeepers, of course – the insurers (though they prefer to be called health plan providers).

Topping that list of health plan providers investors can rely on is the country’s biggest – UnitedHealth Group (UNH, $244.26). Before and after the rise and fall of the Affordable Care Act and now heading into the unknown, the insurer has logged a decade’s worth of year-over-year revenue growth. Earnings expansion has been almost as reliable for the same timeframe.

That shouldn’t change in the foreseeable future, either. Although President Donald Trump is working to abate the rising costs of health care, it’s not an overreaching effort, and the bulk of the planned changes appear to be aimed at drug costs rather than insurers or caregivers. If drug prices are pared back even just a little, health care plan providers will enjoy a little more wiggle room between premiums collected and costs of care.

The “aging of America” will only funnel more business toward the middlemen better equipped to negotiate pricing on behalf of their customers.

• Market value: $59.6 billion
• Dividend yield: N/A

Yes, a biotech stock has earned a spot on a list of workhorse health care names, though Biogen (BIIB, $283.75) isn’t as “biotech-y” as the word normally implies.

Gordon College finance professor Alexander Lowry, a former vice president at JPMorgan Asset Management, explains, “Biogen dominates the market for multiple sclerosis drugs,” and well it should after spending the past 25 years developing treatments for the often-elusive disease. Biogen owns nearly 40% of the $20 billion opportunity and continues to develop drugs for the underserved multiple sclerosis market. A decade’s worth of year-over-year growth in quarterly revenue confirms it’s going to be tough to topple.

Biogen isn’t resting on its laurels … or its MS portfolio, though.

As Lowry also notes, “the company’s experimental drug, called BIIB-037, could become the first disease-modifying treatment for Alzheimer’s.” Alzheimer’s is yet another elusive and poorly treated disease, but BIIB-037 – also called Aducanumab – is a promising monoclonal antibody that abates the amyloid beta plaque that’s believed to clump within the brain of individuals that eventually develop the disease. If it works as hoped, Biogen will have a strong entry in an Alzheimer’s market expected to be worth more than $5 billion by 2022.

• Market value: $2.7 billion
• Dividend yield: 2.0%
• Healthcare Services Group (HCSG, $37.54) isn’t exactly a household name. But that’s the point. Content to remain in the background, never attracts the attention of would-be competitors. That’s how it has managed to log a decade’s worth of uninterrupted revenue growth.

Healthcare Services Group is the name that runs the cafeteria or laundry service (if not both) for nearly 4,000 health care and senior-living facilities. As long as people need health care or seniors need assisted living, they’ll need such facilities, and those facilities will need to provide food and clean sheets.

Ergo, HCSG is apt to be around for a long, long time.

True, last quarter’s bottom line was crimped by an unexpected surge in unpaid receivables, believed to be an indication that the health care industry’s credit-worthiness is waning as the costs become increasingly difficult to contain. That threat was even enough for Stifel to downgrade HCSG in fears that it would have to focus more on collections than marketing going forward.

Even then, though, the downgrade of Healthcare Services Group still concluded the company housekeeping and dietary services has yet to fully penetrate its market, while the outsourced dietary market itself is just starting to mature in a way that will widen profit margins.

• Market value: $327.2 billion
• Dividend yield: 2.7%

Cornerstone Financial Services managing partner Daniel Milan calls Johnson & Johnson (JNJ, $123.45) “one of the most well-known and reliable blue chip health care companies today … (it) consistently produces profits due to their diversification in three main businesses. Those being pharma, medical devices and consumer products.”

He’s absolutely right about a diversified product base that’s kept the top and bottom lines growing for the long haul. It’s the company that makes and markets arthritis and gastrointestinal drug Remicade, which generated $6.3 billion in revenue last year, and anyone who’s ever had any sort of surgery has likely (unknowingly) been a beneficiary of one of its devices. Smoothing out any cyclical ebbs and flows of its pharmaceutical and medical device business are consumer products like its baby shampoo, Band-Aids and Tylenol are always in demand.

Milan adds that J&J has a “nice current dividend yield … and should have continued growth going forward as a result of their strong R&D, which currently has 35 treatments in phase 3 (trials).”

In other words, there’s plenty for growth investors and income investors alike to look forward to.

• Market value: $60.3 billion
• Dividend yield: 1.3%
• Becton, Dickinson (BDX, $226.25) is another one of those oft-overlooked healthcare outfits that thrives despite its relative obscurity. A mix of diagnostic equipment, medication management systems, diabetes care products and more have contributed to years’ worth of consistent revenue and earnings growth.

Yes, those who know the Becton, Dickinson story well will know the past few quarters haven’t exactly been thrilling in terms of profits, or even revenue, for that matter. For the year ending in September, sales fell 2% year-over-year, and for the first fiscal quarter of 2018 ending in December, the company swung to a loss of $174 million.

There’s a significant footnote to add to the discussion. That is, a closer look at BDX’s recent quarterly reveals the bottom line has only been under pressure due to restructuring costs and the impact of new tax laws. Boiling the company’s numbers down to just the basics, it’s still slowly but surely continuing the progress of the past few years.

• Market value: $5.2 billion
• Dividend yield: N/A
• Envision Healthcare (EVHC, $43.09) is yet another one of those overlooked healthcare stocks that quietly continues to log growth on the top and bottom lines.

Envision Healthcare provides a mix of care-delivery solutions. Its physician services arm essentially manages the staffing for hospitals, while its Evolution Health division provides home health solutions. Last but certainly not least, more than 200 surgery centers rely on Envision’s expertise to keep those operations running smoothly and profitably.

If the name rings a bell, it may well be because prolific short-seller Jim Chanos recently railed against the company, suggesting its business model and its billing practices were flawed, and that the company is potentially doomed. Envision argues, though, that it actually is a solution for the nation’s broken healthcare and health insurance system.

Politics and self-serving grandstanding aside, a long-lived steady string of growing operating income also says the industry is just fine with how Envision is doing business.

• Market value: $85.6 billion
• Dividend yield: 3.0%

At the other end of the notoriety spectrum is drugmaker Bristol-Myers Squibb (BMY, $52.50) … the name behind multi-purpose cancer treatment Opdivo and blood-clot preventative Eliquis. Both are relatively young drugs but already have reached a strong stride. The former produced almost $5 billion worth of revenue last year, while the latter wasn’t far behind with sales of $4.9 billion.

It’s not just the explosive growth of the two new-ish therapies that impresses David Bickerton, President of Ohio-based MDH Investment Management. Bickerton also likes the company’s dividend history and yield. BMY presently pays 3% of its price as a dividend, which has risen every year like clockwork since the late 1990s. Better yet, it can more than afford that payout, and shareholders have every reason to believe the projected sales and earnings growth will continue to drive dividend hikes down the road.

Bickerton also is a fan of Bristol-Myers Squibb’s “grade ‘A’ balance sheet” that can “weather any short-term issues that arise.” That balance sheet consists of $6.8 billion in cash and a manageable $8.0 billion in total debt, versus a market cap of $85.6 billion.

• Market value: $42.0 billion
• Dividend yield: N/A

Name any instrument or piece of medical equipment you think you might find in a hospital or clinic, and there’s a good chance Boston Scientific (BSX, $30.46) makes at least one version of it. From heart stents to diagnostic tools to infection-prevention and more, the company’s products are crucial to caregivers.

Boston Scientific was in dire straits not too long ago, calling into question its status as a healthcare workhorse that investors could feel good about latching onto. Through 2013, revenue was waning and the company logged an inordinate number of one-time losses as it searched for a CEO that could turn the ship around. Mike Mahoney finally brought the right chemistry into the corporation when he took the helm in 2012. It took a few more quarters for him to stop the bleeding, but whatever he’s doing is working. Boston Scientific has booked year-over-year revenue growth every quarter since late 2015, and GAAP as well as operating profits are reliable again.

BSX still isn’t cheap among healthcare stocks, priced at nearly 20 times its forward-looking earnings. But Boston Scientific’s turnaround is an encouraging work in progress – one that might be worth the higher price.

• Market value: $11.9 billion
• Dividend yield: N/A

Last but not least, add kidney care company DaVita (DVA, $68.53) to a list of healthcare stocks that are abnormally reliable come rain or shine.

DaVita runs more than 2,400 dialysis centers across the country. Would-be rivals find they simply can’t compete with the company’s sheer size and scale. That’s how DaVita has managed a track record of slow (and sometimes not so slow) and steady revenue and profit growth for the past several years.

This is the same DaVita that ran into problems back in 2015 when the company was implicated as an abuser of the Medicare and Medicaid systems. The claims were largely accurate, forcing changes that ended up creating a revenue and earnings headwind for the organization. The company seems to have put the gaffe in the past, though, and is starting to expand the top line again in a healthy, sustainable way.

If it helps to know it, Warren Buffett’s Berkshire Hathaway has held onto its 38 million shares of DVA throughout all of its volatility, perhaps tacitly signaling that changes made them and some divestitures in the works now are going to leave behind an even more powerful, focused cash-generation machine.