A stock that may help set you up for life is one that will bring in revenue and profit over the long term. Share price performance should follow. So, this is one you'll want to hold onto for the long term too. Some of these players may also offer dividends. This ensures recurring income from your investment -- and will help build your wealth over time.
Which stocks fit the bill? Let's take a look at three healthcare companies that are terrific buys right now. One is a player with four successful businesses. Another is the global leader in robotic surgery. And the third has what it takes to transform the prevention and treatment of disease over time.
1. Abbott Laboratories
A recall of Abbott Laboratories' (ABT +1.40%) baby formula earlier in the year weighed on first-quarter earnings. That and the general market environment hurt the shares. They've slipped about 24% so far this year. Now, they're trading at around 25 times trailing-12-month earnings -- the lowest level since 2016. Considering Abbott's earnings track record over time, future prospects, and dividend payments, this is a buying opportunity.
NYSE: ABT
Key Data Points
Abbott has grown revenue and profit -- into the billions of dollars -- over time. And Abbott is also a solid bet if you're looking for dividend growth. The company is a Dividend King. That means it has increased its dividend for at least the past 50 consecutive years. So, overall, Abbott has proven that it can grow earnings and share the wealth with investors.
I'm optimistic Abbott can continue along this path. The company has four strong businesses: medical devices, diagnostics, nutrition, and established pharmaceuticals. If one of these faces headwinds -- such as the baby formula recall hurting the nutrition segment -- the others may compensate. For instance, in the first quarter, while nutrition sales fell, the three others posted double-digit gains. All of this means Abbott is a great company to buy and hold onto for a very long time.
2. Intuitive Surgical
Intuitive Surgical (ISRG +2.46%) holds nearly 80% of the global robotic surgery market, according to BIS Research. That's an enormous lead. And I'm not expecting the company to give up too much of its share in the coming years for a couple of reasons.
First, Intuitive's flagship da Vinci robot costs about $2 million. If hospitals are satisfied with performance, it's unlikely they'll shift to another product after making such an investment. Second, most surgeons train on the da Vinci. They probably prefer a device they're familiar with over a new system that would require additional training.
Another thing I like about Intuitive is the fact that it doesn't only generate revenue through the sales or leasing of the da Vinci system. It actually generates most of its revenue through the sales of instruments and accessories needed to perform surgeries using the da Vinci. And Intuitive also sells service plans to hospitals for maintenance of the systems. So, each customer represents recurrent revenue.
NASDAQ: ISRG
Key Data Points
Intuitive shares have dropped more than 42% this year. And they're now trading at about 46 times trailing-12-month earnings. That's compared to more than 70 at the start of the year. This is a bargain considering Intuitive's market leadership -- and revenue and profit growth over time.
ISRG Revenue (Annual) data by YCharts
3. Moderna
Moderna (MRNA 1.76%) has shown us the power of its messenger RNA technology. The company's mRNA coronavirus vaccine has helped protect people around the world during the pandemic. This is Moderna's first commercialized product. And it's brought in billions of dollars in revenue -- namely, $18.5 billion last year.
Moderna shares soared in the earlier stages of the pandemic. In 2020, they climbed 434%. Since, though, the vaccine stocks investing theme has lost some steam. And Moderna shares followed. Investors worry vaccine makers' revenue may have reached a peak -- and it might drop significantly in a post-pandemic world.
NASDAQ: MRNA
Key Data Points
But I'm still optimistic about Moderna for two reasons. First, it looks like at least the most at-risk people may go for annual coronavirus boosters. And Moderna is even working on a combined flu/coronavirus shot that eventually could attract those who go for annual flu shots. So, vaccine revenue probably won't drop off a cliff.
And second, Moderna is just getting started when it comes to mRNA medicine. The company has 46 programs in various therapeutic areas in the pipeline. And three of those (outside of the coronavirus program) are in phase 3 trials. Moderna's $19.3 billion in cash will help the company bring in candidates through development. So opportunity for more revenue lies ahead.
Moderna stock has lost more than 35% this year. Considering this -- and what the product portfolio may look like a few years down the road -- now is time to snap up shares of this innovative biotech company.
