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3 Top Stocks to Buy to Profit From the Healthcare Revolution

By Keith Speights - Mar 28, 2021 at 6:04AM

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From genomics to virtual care, these stocks should be huge long-term winners.

Revolutions don't always grab people's attention. And they don't necessarily happen quickly. Some revolutions occur stealthily and steadily. But they still result in massive changes to the status quo.

I think this kind of process is going on right now in the healthcare sector. Technological disruptions that began years ago are now really making an impact. However, the full effects of these changes won't be felt until a few years from now.

Such shifts present enormous opportunities for investors who know what to look for and have the patience to wait for the future to arrive. Here are three top stocks you can buy right now to profit from the healthcare revolution.

Man pointing to a light with healthcare-related icons arranged in a circle around it

Image source: Getty Images.

Illumina: The key company behind the genomic explosion

I can't tell you how many times I've either talked or written about ARK Invest CEO Cathie Wood's statement that "the biggest upside surprises are going to come from the genomic space." My view is that she's right. And there's one key company behind what could be a genomic explosion -- Illumina (ILMN -0.01%).

Illumina is the 800-pound gorilla of genomic sequencing. Its gene sequencing systems are used throughout the world. The company expects to generate revenue of more than $3.8 billion this year, up nearly 20% from 2020.

There are multiple trends driving Illumina's growth. Demand for non-invasive pregnancy testing is increasing. More countries are launching major population genomics efforts that map the DNA of hundreds of thousands of people. Research into genetic diseases is expanding. The adoption of genomic profiling in cancer treatment continues to grow rapidly.

Illumina also stands to benefit from the advancement of liquid biopsies -- tests that analyze fragments of DNA from tumor cells in the blood. The company's pending acquisition of GRAIL, which Illumina originally formed, will make it a leader in the next-generation sequencing oncology market that's expected to grow to $75 billion by 2035.

Intuitive Surgical: A robotic-surgery juggernaut

Robots can deliver higher-quality levels and efficiency in manufacturing. Can they bring these same benefits to surgical procedures? It's certainly a more difficult arena, but the answer is a definite yes. Intuitive Surgical (ISRG -1.80%) created the robotic-surgery market more than two decades ago and remains a juggernaut in the industry.

More than 8.5 million procedures have been performed with Intuitive's surgical robots through the years. Over 1.2 million of them were done in 2020 alone. Close to 6,000 of the company's da Vinci robotic surgical systems are in use today.

However, Intuitive Surgical still has tremendous growth prospects. The company estimates that around 6 million procedures are performed each year for which its systems already have regulatory clearances. It thinks, though, that there are 20 million soft tissue surgical procedures performed annually where robotic assistance could be used. 

Other companies, including Johnson & Johnson and Medtronics, hope to claim a share of the robotic surgical systems market. They could be successful. Even if they are, however, Intuitive Surgical is well positioned to continue growing with its strong track record, large installed base, and continual innovation.

Teladoc Health: A telehealth pioneer and virtual-care leader

Many conditions can be diagnosed and treated without having to travel to a doctor's office. Telehealth offers convenience for patients and lower costs for payers. Teladoc Health (TDOC -4.67%) stands out as a pioneer in telehealth and is the global leader in virtual care.

Thanks in large part to the COVID-19 pandemic, Teladoc's business skyrocketed in 2020. The company's revenue nearly doubled year over year to more than $1 billion. Its virtual care visits soared 156% to 10.6 million. 

Virtual care is still only in its early innings, though. Significant opportunities remain in expanding telehealth. There's also a huge need to help individuals more effectively manage chronic diseases. Teladoc has the technology and resources to rise to the challenge.

Sure, the company faces several smaller rivals. It also will soon compete against a much bigger player, with Amazon.com recently announcing plans to market its Amazon Care telehealth service to employers this summer. However, Teladoc has a significant head start and claims over 40% of the Fortune 500 as customers. The stock remains a great way to profit from the virtual care boom.

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Stocks Mentioned

Teladoc Health, Inc. Stock Quote
Teladoc Health, Inc.
TDOC
$32.02 (-4.67%) $-1.57
Illumina, Inc. Stock Quote
Illumina, Inc.
ILMN
$233.54 (-0.01%) $0.02
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$2,230.25 (-1.36%) $-30.85
Intuitive Surgical, Inc. Stock Quote
Intuitive Surgical, Inc.
ISRG
$219.66 (-1.80%) $-4.03
Johnson & Johnson Stock Quote
Johnson & Johnson
JNJ
$178.16 (0.74%) $1.31
Medtronic plc Stock Quote
Medtronic plc
MDT
$103.22 (0.54%) $0.55

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

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