The medical sector is expected to thrive due to rising chronic diseases, an aging population, increased health awareness, quick medicine discovery, and technological advancements.
Quality medical stocks UnitedHealth Group Incorporated (UNH), Nature's Sunshine Products, Inc. (NATR), and CVS Health Corporation (CVS) should benefit from the industry tailwinds. So, I think these stocks could be ideal buys for the long haul.
Given the industry's labor shortage, healthcare providers are engaging in virtual care, automation, and artificial intelligence (AI) to scale up and meet demand. Furthermore, McKinsey predicts that the healthcare services and technology sector will grow by 10% by 2026.
In addition, the medical device market is predicted to expand due to rising investments and breakthrough developments. The global medical devices market is expected to grow at a 3% CAGR until 2032.
Now let's delve deeper into these stocks mentioned above:
UnitedHealth Group Incorporated (UNH)
UNH operates as a diversified healthcare company in the United States. It operates through four segments: UnitedHealthcare; OptumHealth; OptumInsight; and OptumRx.
UNH's forward EV/Sales of 1.37x is 65.2% lower than the industry average of 3.93x. Its forward Price/Sales of 1.23x is 71.8% lower than the industry average of 4.38x.
UNH's trailing-12-month EBIT margin of 8.77% is higher than the industry average of negative 0.48%. Its trailing-12-month ROTA of 8.19% is higher than the industry average of negative 30.71%.
UNH's total revenue came in at $82.79 billion for the fourth quarter that ended December 31, 2022, up 12.3% year-over-year. Its adjusted net earnings increased 18.1% year-over-year to $5.06 billion. Also, its adjusted EPS came in at $5.34, up 19.2% year-over-year.
UNH's revenue is expected to increase 10.8% year-over-year to $359.07 billion in 2023. Its EPS is estimated to grow 12.4% year-over-year to $24.94 in 2023. It has surpassed EPS estimates in all four trailing quarters. Over the past year, the stock has gained marginally to close the last trading session at $475.94.
UNH's POWR Ratings reflect this promising outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
UNH has a B for Growth, Stability, Sentiment, and Quality. Within the A-rated Medical - Health Insurance industry, it is ranked #4 out of 11 stocks. Click here for the additional POWR Ratings for Value and Momentum for UNH.
Nature's Sunshine Products, Inc. (NATR)
Natural health and wellness company NATR primarily manufactures and sells nutritional and personal care products in Asia, Europe, North America, Latin America, and internationally.
NATR's forward EV/Sales of 0.42x is 74.6% lower than the industry average of 1.64x. Its forward Price/Sales of 0.50x is 56.4% lower than the industry average of 1.14x.
NATR's trailing-12-month gross profit margin of 71.59% is 127% higher than the industry average of 31.55%. Its trailing-12-month ROTA of 4.96% is 26.7% higher than the industry average of 3.93%.
NATR's selling, general, and administrative expenses came in at $36.79 million for its third quarter ended September 30, 2022, down 6.9% year-over-year. Its total current liabilities came in at $63.89 million for the period ended September 30, 2022, compared to $76.67 million for the period ended December 31, 2021.
NATR's revenue is expected to rise marginally year-over-year to $420.61 million in 2023. Its EPS is estimated to grow 280% year-over-year to $0.18 in 2023. Over the past three months, the stock has gained 20.7% to close the last trading session at $10.84.
It's no surprise that NATR has an overall A rating, equating to a Strong Buy in our POWR Ratings system. It has an A grade for Value and Quality and a B for Sentiment and Stability. It is ranked first among eight stocks in the B-rated Medical - Consumer Goods industry.
Beyond what is stated above, we've also rated NATR for Growth and Momentum. Get all NATR ratings here.
CVS Health Corporation (CVS)
CVS provides health services in the United States. The company operates through three segments: Health Care Benefits; Pharmacy Services; and Retail/LTC. It operates retail locations, online retail pharmacy websites, LTC pharmacies, and onsite pharmacies.
On February 8, CVS agreed to acquire Oak Street Health, Inc. (OSH) for approximately $10.6 billion. With this acquisition, the company is expected to significantly develop its care delivery strategy for consumers by reducing medical expenses and improving health outcomes.
CVS' forward EV/Sales of 0.49x is 87.6% lower than the industry average of 3.93x. Its forward Price/Sales of 0.32x is 92.6% lower than the industry average of 4.38x.
CVS' trailing-12-month EBIT margin of 4.79% is higher than the industry average of negative 0.48%. Its trailing-12-month ROTA of 1.82% is higher than the industry average of negative 30.71%.
CVS' total revenue for the fiscal fourth quarter that ended December 31, 2022, increased 9.5% year-over-year to $83.85 billion. The company's operating income came in at $3.62 billion, up 62.3% year-over-year. Its attributable net income rose 76.3% from the year-ago value to $2.30 billion. Also, its EPS increased 78.6% year-over-year to $1.75.
Street expects CVS' revenue to increase 3.7% year-over-year to $334.45 billion in 2023. Its EPS is expected to increase marginally year-over-year to $8.84 in 2023. It surpassed EPS estimates in each of the four trailing quarters. CVS's stock has lost marginally intraday to close the last trading session at $83.54.
CVS' robust prospects are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system. It has a B for Value and Stability.
Within the B-rated Medical - Drug Stores industry, it is ranked first among four stocks. To access CVS' ratings for Growth, Momentum, Sentiment, and Quality, click here.
What To Do Next?
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UNH shares were trading at $475.04 per share on Wednesday morning, down $0.90 (-0.19%). Year-to-date, UNH has declined -10.40%, versus a 3.20% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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