Now might be one of the best times to invest in healthcare stocks. As COVID-19 continues to spread throughout the world, many companies have already seen significant increases in revenue as demand for their services grows.
While there's plenty of companies to choose from, you still need to do your due diligence before making an investment decision. Here are three healthcare stocks that check all the boxes for a sound investment and are worth checking out.
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1. Teladoc
Telehealth services have understandably become hot stocks amid this COVID-19 pandemic. With the Trump administration dialing back previous telehealth restrictions, many companies have seen a dramatic surge in new patient appointments.
Teladoc (TDOC 2.17%) is one of the primary telehealth service providers, and shares of the stock shot up considerably over the past month. In early March, Teladoc said it saw a 50% increase in new patient visits, largely due to COVID-19. At the time, the total number of U.S. cases was still relatively small, with around 500 confirmed COVID-19 infections. In under a month, this figure has ballooned to over 150,000, with some experts warning that there could be millions of cases in the near future.
As such, demand for Teladoc is expected to continue to increase exponentially. However, even without COVID-19, Teladoc has been reporting stellar growth figures. Fourth-quarter revenues increased to $156.5 million, a 27% increase from last year, while the total number of visits increased by 44% to 1.2 million. All in all, the future looks especially bright for this company, something that many growth investors are quickly realizing.
2. Bristol Myers Squibb
Value and dividend-focused investors also have many investment opportunities in the healthcare sector. In particular, a number of large-cap pharmaceutical giants are reporting double-digit percentage growth figures, while paying out impressive dividends. Bristol Myers Squibb (BMY +1.40%) is one such company.
Despite reporting a 15.4% increase in revenue between the fourth quarter of 2018 and the fourth quarter of 2019, as well as boasting a solid 3.4% dividend yield, this company trades at a pretty cheap valuation. Its price-to-sales (P/S) ratio comes in at 3.6, while its price-to-equity (P/E) ratio is 24.8.
Bristol's existing lineup of drugs is already doing quite well, including two of its best-performing drugs, cancer treatment Eliquis and an anticoagulant called Opdivo, which brought in $7.9 billion and $7.2 billion in annual revenue, respectively. Both drugs are reporting impressive revenue growth, with Eliquis seeing a 23% increase in sales while Opdivo had a 7% increase from last year.
The company's acquisition of Celgene in 2019 added a number of potential blockbusters to its clinical lineup. The biggest of these is Revlimid, a treatment for a type of bone marrow cancer known as multiple myeloma. In just a one-month period between November and December, Revlimid brought in $1.3 billion in revenue. Given a full year's worth of sales, Revlimid could easily become Bristol's top revenue-generating product.
Although some investors might scoff at Bristol's relatively high debt level -- around $46.7 billion, thanks to its Celgene acquisition -- the rest of the business is extremely sound. With a competent management team, double-digit revenue growth, and a solid dividend, Bristol Myers Squibb looks very well poised to have a stellar 2020.
3. Gilead Sciences
If you're looking to invest in a company that's directly working on a COVID-19 treatment, then you have a lot of different stocks to choose from. Both small-cap biotech companies and well-established healthcare giants have jumped into this area, quickly making it quite a competitive arena.
Gilead Sciences (GILD +1.06%) stands out in this regard thanks to its head start on its own COVID-19 treatment, remdesivir. A former Ebola drug, remdesivir is an antiviral treatment that has shown some effectiveness in treating symptoms of patients with the novel coronavirus. Although a more recent study featuring 12 patients found the efficacy of remdesivir to be somewhat unclear, Gilead's CEO said further details about multiple ongoing studies will be available in the coming weeks.
Even putting remdesivir aside, Gilead still has a lot going for it. For one, the company remains a leader in the HIV market, with its HIV business segment bringing in $4.6 billion in fourth-quarter revenue, up 12.2% from the fourth quarter of 2018. Its prevention pill Truvada remains a strong revenue driver for the company, alongside other HIV drugs such as Biktarvy, which has seen annual sales almost quadruple between 2018 and 2019.
All this is on top of an already attractive 3.7% dividend yield, which is quite respectable for any company. There's a lot to be excited about with Gilead, regardless of how its COVID-19 treatment works out, and investors should feel confident that this company will do well in the months and years to come.
