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3 Top Healthcare Stocks to Buy Right Now

By Keith Speights - Mar 20, 2021 at 6:04AM

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They're pioneers in their niche markets. And they still have huge growth prospects.

If you're looking for a hot area in which to invest, you'll definitely want to check out the healthcare sector. Healthcare accounts for nearly 18% of the U.S. gross domestic product (GDP). The sector continues to grow, fueled in part by aging populations across the world.

Some healthcare investment opportunities especially stand out. Here are three top healthcare stocks to buy right now.

Hands held up to a projection of healthcare-related icons

Image source: Getty Images.

Intuitive Surgical

Performing surgeries with the help of a robot would've been only science fiction not too long ago. Over the past two decades, though, Intuitive Surgical (ISRG 2.62%) has pioneered the use of robotic surgical technology. Today, more than 8.5 million procedures have been performed with its surgical robots.

There's still a lot of room for Intuitive Surgical to grow. The company estimates that there are around 6 million procedures performed each year for which its robotic systems already have regulatory clearances. That's five times the number of procedures in which Intuitive's systems were used last year. Aging trends should drive even higher volumes for those types of procedures in the future.

Intuitive Surgical is also investing in research and development to expand the procedures for which its systems can be used. The company estimates that there are roughly 20 million soft tissue surgical procedures performed each year and wants to target all of them.

Sure, Intuitive won't have the market all to itself. However, it has a huge first-mover advantage with a long track record of success. And customers like the company, as evidenced by Intuitive's Net Promoter Score (NPS) of 69. Any NPS above 50 is considered excellent. This stock should soar over the next decade as the adoption of robotic surgery increases.

Teladoc Health

The idea of visiting doctors virtually has been around for years. But telehealth really hit its stride in 2020, thanks to the COVID-19 pandemic. Teladoc Health (TDOC 6.94%) ranked among the biggest winners, with its shares skyrocketing nearly 140%.

It's still in the early innings for telehealth, though. International consulting firm McKinsey and Company estimates that the annual U.S. virtual-care market will grow to around $250 billion after the pandemic is over. As the leading telehealth services provider, Teladoc should be able to profit from this growth.

Of course, such a massive market opportunity is attracting competition. In addition to battling current rivals, Teladoc will soon face another threat from Amazon.com. The internet giant recently announced plans to expand its Amazon Care telehealth service to all U.S. employees this summer, as well as target other employers later this year.

Teladoc should be able to hold its own against Amazon, though. Its customer base already includes more than 40% of the Fortune 500. The company's acquisition of Livongo Health last year also gives it a digital health platform for helping individuals manage chronic conditions -- a capability that its rivals don't have. 

Most importantly, the telehealth opportunity is big enough to support multiple winners over the long term. Teladoc Health will almost certainly be one of them.

Vertex Pharmaceuticals

While Intuitive Surgical and Teladoc Health have some competition, Vertex Pharmaceuticals (VRTX 1.51%) enjoys a monopoly. There are currently four drugs approved in the U.S. for treating the underlying cause of cystic fibrosis (CF), and Vertex markets all of them.

This monopoly has fueled tremendous growth for Vertex. It's also given the biotech an enviable cash stockpile of $6.7 billion. Look for Vertex to put that money to good use by making deals to expand its pipeline.

The company, however, has its sights set beyond CF. Vertex expects to announce results from a phase 2 study of VX-864 in treating another rare genetic disease, alpha-1 antitrypsin deficiency, within the next few months. It's working with CRISPR Therapeutics to evaluate gene-editing therapy CTX001 in treating rare blood disorders beta-thalassemia and sickle cell disease. Vertex also anticipates reporting results from a phase 2 study of VX-147 in treating rare genetic disease APOL1-mediated focal segmental glomerulosclerosis later this year.

Perhaps the most intriguing opportunity for Vertex, though, is in a disease that isn't so rare. The biotech advanced experimental gene therapy VX-880 into clinical testing earlier this month for treating type 1 diabetes. Vertex thinks that VX-880 has the potential to essentially cure the disease.

It's unlikely that all of Vertex's pipeline candidates will be successful. However, all the company needs is one or two of them to pan out for it to continue delivering tremendous growth in the future.

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Stocks Mentioned

Vertex Pharmaceuticals Incorporated Stock Quote
Vertex Pharmaceuticals Incorporated
VRTX
$273.73 (1.51%) $4.08
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,302.93 (3.66%) $81.38
Intuitive Surgical, Inc. Stock Quote
Intuitive Surgical, Inc.
ISRG
$229.16 (2.62%) $5.86
Teladoc Health, Inc. Stock Quote
Teladoc Health, Inc.
TDOC
$35.77 (6.94%) $2.32
CRISPR Therapeutics Stock Quote
CRISPR Therapeutics
CRSP
$58.34 (5.63%) $3.11

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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