With all of the stocks out there, it's sometimes difficult to choose just a few to add to your portfolio at any given time. So what should you look for? It's always important to consider a company's track record and/or future prospects, valuation, and potential catalysts ahead. And if we look at those points, three healthcare companies stand out right now.
Biotech CRISPR Therapeutics (CRSP 0.34%) may soon score its first product approval. Healthcare giants Johnson & Johnson (JNJ -0.46%) and Medtronic (MDT 0.62%) have increased earnings over time -- and they've both gone through recent transformations that should spur growth in the coming quarters. And all of these players are trading at very reasonable prices today. Let's take a closer look at these three stocks to buy hand over first in November.
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1. CRISPR Therapeutics
CRISPR Therapeutics might soon reach a major milestone. The U.S. Food and Drug Administration (FDA) is set to decide on what may become its very first product -- exa-cel for sickle cell disease -- next month. And the agency will rule on exa-cel for beta thalassemia in March. Together, these indications may lead to blockbuster revenue for exa-cel.
But that's not all. A nod from the FDA could be seen as a vote of confidence in the cutting-edge, gene-editing technology that's behind all of the candidates in CRISPR Therapeutics' pipeline. The idea is to fix faulty genes responsible for disease by cutting DNA in a certain location and letting a natural repair process take over. If all works properly, this could result in functional cures for certain diseases.
CRISPR Therapeutics shares soared more than 12% in one trading session this week after positive comments about exa-cel during an FDA advisory committee meeting. But the stock is still far from the highs it reached a couple of years ago when there was a lot less visibility on the future. This means there's plenty of room for the stock to run -- and for you to benefit.
2. Johnson & Johnson
Johnson & Johnson has increased earnings over the years, and you probably know the company well thanks to products like Band-Aid bandages and Tylenol. But those types of products actually haven't driven growth in recent times. This year, J&J spun off its consumer health business to focus on its higher-growth businesses of medtech and pharmaceuticals.
The spin-off offered J&J three big advantages. First, it generated more than $13 billion in proceeds that the company now can use for other priorities, like acquiring a company or program. Earlier this year, J&J spoke of having a "voracious" appetite for business deals.
Second, it allows J&J to devote all of its financial and research resources to programs most likely to increase earnings. Finally, slower growth rates of the consumer health business no longer will weigh on J&J's overall revenue-growth rate.
J&J should benefit from this move, and the results should appear in upcoming earnings reports. At the same time, J&J aims to increase pharmaceutical sales to $57 billion in 2025 from $52 billion last year. So, trading at 14 times forward-earnings estimates, this pharma giant looks cheap.
3. Medtronic
Medtronic already is a powerhouse in the world of medical devices, with cardiovascular, neuroscience, medical surgical, and diabetes business units. In the past 12 months, it's won 125 approvals in major markets.
Medtronic also is making progress in its transformation into a higher-growth company. It's divested certain businesses, made key acquisitions, streamlined processes, and focused investment in promising areas such as artificial intelligence (AI).
The efforts are bearing fruit. For example, in the most recent quarter, all four of the company's units posted organic-revenue growth of 6%. And Medtronic lifted its fiscal-year revenue and earnings-per-share forecasts.
Moving forward, investors should expect additional gains thanks to the company's investment in research and development (R&D); it aims for R&D growth at or above revenue growth. And Medtronic is focusing on acquisitions to reinforce growth. Finally, Medtronic already is using AI in certain platforms, such as spinal surgery, so the company could be one of the top healthcare-in-AI winners over time.
Today, Medtronic trades for only 13 times forward-earnings estimates, which looks like an absolute steal and makes it a stock to buy hand over fist right now.
