As investors, diversifying our portfolios is crucial to reducing risk and ensuring we’re not overly dependent on returns in one sector. One sector that’s often overlooked but worth considering is healthcare. Many healthcare stocks are currently in the “sweet spot,” offering great valuations compared to competitors, new developments set to expand revenue, or a combination of both. Here are three healthcare stocks positioned at a great time to buy.
Johnson & Johnson (NYSE:JNJ) is a global healthcare innovation company focusing on pharmaceutical technology and “MedTech.” Its recent Q4 FY2023 earnings exceeded expectations, and 21 Yahoo Finance analysts project an optimistic one-year price target between an average of $174.76 and a high of $215. JNJ’s bladder cancer drug Balversa recently gained full FDA authorization, and the company announced a $2 billion acquisition of Ambrx Biopharm. JNJ’s P/E valuation is slightly undervalued at 15.29x compared to the sector median of 18.68x, making it an attractive investment opportunity.
UnitedHealth Group (NYSE:UNH) offers various healthcare services, including medical insurance plans, running clinics and hospitals, and providing wellness programs. The stock is up over 3% in the past year, but Yahoo Finance analysts have an average 1-year price target of $552.22, far above the current share price of around $503.00. The company reported revenue of $371.6 billion, a growth of over 15% yearly, and earnings are expected to grow around 7% for the next few years. Its forward P/E ratio of 19.40x, over 33% lower than the sector median, provides investors a perfect opportunity to scoop up some shares.
Acumen Pharmaceuticals (NASDAQ:ABOS) is a biopharmaceutical company focusing on developing therapies for Alzheimer’s disease. Although the stock is down over 35% in the past year, Yahoo Finance analysts have an average 1-year price target of $14, far above the current price of around $3.42. Acumen’s drug ACU193 is the first of its kind, and the company has received a $3.6 million grant to continue its research. Its Price/Book ratio of 0.67x is over 70% below the sector median of 2.25x, indicating the company’s relative undervaluation compared to its peers.
In conclusion, Johnson & Johnson, UnitedHealth Group, and Acumen Pharmaceuticals are three healthcare stocks currently in the sweet spot for investors looking to diversify their portfolios and capitalize on promising opportunities in the healthcare sector.
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