Are you looking for some solid healthcare stocks that you can buy and hold, and not worry about over the long term? Three that are excellent buys today are Teladoc Health (TDOC -0.07%), AstraZeneca (AZN 0.49%), and Intuitive Surgical (ISRG -0.55%).
These companies will have you covered whether you want exposure to telehealth, next-generation technology, or just a solid drugmaker with a robust business.
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1. Teladoc Health
Telehealth is a growing sector of healthcare, and a great way to gain exposure to that is by investing in a top company like Teladoc. Last year, there were 15.4 million visits on its platform and the numbers rose even as concerns relating to COVID-19 were beginning to subside and the economy was slowly returning to normal. In 2022, Teladoc expects total visits to reach as high as 20 million and revenue to be around $2.6 billion -- for a year-over-year sales increase of at least 25%.
Those are some promising growth numbers for a badly beaten-up stock like Teladoc. While the shares are down more than 20% so far in 2022, investors have been overly bearish on what still looks to be a solid growth stock. And that bearishness becomes less of a mystery when you see that the ARK Innovation ETF, a top exchange-traded fund that holds the stock, is down 28%; growth stocks simply haven't been a popular place to invest of late. And there are also more investors shorting Teladoc's stock than a year ago:
TDOC Percent of Float Short data by YCharts
Because of the high short interest, it's a stock that could be poised for a short squeeze this year. Teladoc has been a top business in telehealth and it earns high marks from its users, ranking first in customer satisfaction from a 2021 survey conducted by J.D. Power.
Teladoc isn't a business I would bet against -- and with the stock trading at levels that are lower than when it merged with chronic care company Livongo back in 2020, it could be a steal of a deal right now.
2. AstraZeneca
Drugmaker AstraZeneca is doing better than Teladoc -- its shares are up 10% year to date and are even outperforming the S&P 500 (which has fallen by 6%). And there's good reason for that bullishness as this can be a safe stock to hold for years.
For one, it pays a dividend that currently yields 2.3% -- better than the S&P 500's 1.3%. Plus, its underlying financials are incredibly strong, generating positive free cash flow in each of the past five years. In 2021, it reported free cash of $3.8 billion, which was 72% higher than in the prior year.
Revenue in 2021 rose by 41% to $37.4 billion, and for this year the company expects the growth rate to be in the high teens; meanwhile, the company anticipates that core earnings per share will rise at least 20%. While it foresees a slowdown for COVID-19 therapies, AstraZeneca is banking on a strong first full year for Alexion, a rare disease company it acquired this past year, giving it a new growth avenue to pursue.
With a diversified business covering more therapeutic areas, AstraZeneca can put all that free cash flow to good use and continue strengthening its financials. At a forward price-to-earnings (P/E) multiple of just 13, the stock is also cheap compared to drugmakers Eli Lilly and Johnson & Johnson, which trade at 33 and 16 times their future profits, respectively.
3. Intuitive Surgical
Robotic-assisted surgery is an emerging industry. In 2020, the global market was only worth $6 billion. But according to Verified Market Research, that figure will nearly quadruple to more than $22 billion by 2028.
One company which can benefit from that growth is Intuitive Surgical. Its robotic-assisted devices are showing an encouraging uptick in demand as hospitals resume their regular day-to-day operations. Its flagship product, the da Vinci Surgical System, is up to an installed base of 6,730 as of the company's fourth quarter (ended Dec. 31). The number of shipments during the period also rose by 18% year over year.
The company's growth in recent years has certainly looked promising:
ISRG Revenue (Quarterly) data by YCharts
What's especially encouraging is that the business is incredibly profitable in these still-early stages -- Intuitive Surgical's net margin topped 30% last year.
Currently, the company trades at a high P/E multiple of close to 60, which will turn many value-oriented investors away. And that's likely why shares of Intuitive Surgical are down 22% year to date; investors have been more hesitant to invest in growth stocks of late. However, given the potential in the industry and the company's strong margins, this could still be an investment that pays off significantly in the years ahead. Intuitive Surgical's profits are sure to improve as the business grows.
