Two Straightforward Healthcare Shares to Invest in with a $1,000 Budget Instantly
Two Straightforward Healthcare Shares to Invest in with a $1,000 Budget Instantly
A few elements can make a stock an easy choice to buy and hold for a long time. The company could be dominating its market or having a diverse presence in multiple markets. Regardless, it should have a consistent history of earnings growth and promising future prospects. It's the type of company you can add to your investment portfolio, then sit back and relax, knowing that this company is likely to perform well in the long run.
This is a stock you'd want to buy now and hold onto for the next five to ten years. This gives the company time to increase its earnings, which typically leads to an increase in the stock's price. As a long-term investor, you stand to gain not just in a single year, but potentially over most of your ownership period.
If you have $1,000 to invest right now, or even less, these are two healthcare stocks that make an excellent addition to any portfolio.
1. Intuitive Surgical
Intuitive Surgical (ISRG -0.73%) is the global leader in robotic surgery. With a compound annual growth rate of around 15%, this market is predicted to surpass $25 billion by 2030, as per Meticulous Research. Intuitive's flagship product is the da Vinci, a system used in various surgeries, from cardiac, gynecology, and urology to general surgery such as hernia procedures.
Intuitive faced challenges early in the pandemic as hospitals worldwide postponed surgeries. However, in recent times, the volume of procedures has been growing steadily. In the most recent quarter, da Vinci procedures increased by 18% compared to the previous year, and revenue reached more than $2 billion, up by 17%. Importantly, Intuitive expanded its installed base by 15% to over 9,500 systems by the end of September.
I'm fond of Intuitive's strong competitive advantage, known as a moat, which has two components. First, surgeons are trained on the da Vinci and are accustomed to the platform, so they're unlikely to switch to a competitor. Second, after investing more than $1 million in a robot, hospitals are likely to continue using the platform to recoup their investment over several years.
I also like the fact that Intuitive generates most of its revenue not from selling the robots themselves, but from selling the instruments and accessories required for the procedures. This is positive because it provides the company with a form of recurring revenue, meaning revenue from the da Vinci doesn't stop at the time of purchase or leasing.
Intuitive may appear expensive, trading at more than 75x forward earnings estimates, but its leadership, moat, and recurring revenue make the price justifiable.
2. Abbott Laboratories
Abbott Laboratories (ABT -0.24%) is a multifaceted healthcare company, with four main divisions: Medical devices, diagnostics, nutrition, and established pharmaceuticals. This diversification is beneficial since if one of these businesses encounters problems, another can help maintain overall growth.
This situation is currently happening. With coronavirus testing declining, the diagnostics business has seen a revenue decrease. However, in the last quarter, the medical devices division reported double-digit revenue growth, helping Abbott to report a 5% increase in revenue to $10.6 billion. Over time, Abbott has consistently increased its revenue and profit.
Abbott sells market-leading products across its divisions, starting with the Ensure brand in its nutrition business and the FreeStyle Libre continuous glucose monitoring system in its medical devices unit. In fact, Abbott's sales of glucose monitoring systems generated more than $1.6 billion in the last quarter, marking a 20% year-over-year increase.
The company also has a full pipeline of innovations to continue its growth trajectory. It recently launched Lingo, a continuous glucose monitoring platform for personal use. Without a prescription, anyone can access this system to monitor their metabolic health.
Abbott shares trade for around 23x forward earnings estimates. This is a reasonable price to pay for a company with a strong track record of growth, market-leading products, and promising long-term prospects.
After investing in Intuitive Surgical, you can expect a potential increase in your money over the long term due to the company's dominance in the robotic surgery market and its robust financial performance. With Intuitive's strong competitive advantage and recurring revenue model, the high price tag may seem justifiable.
If you're looking for a diversified healthcare company with promising growth prospects, Abbott Laboratories could be a wise choice for your finance portfolio. The company's multiple business divisions, such as medical devices, diagnostics, nutrition, and pharmaceuticals, help offset potential losses in one area with growth in another, ensuring a consistent revenue and profit increase over time.