6 Top Healthcare Stocks for 2021

June 08, 2021 08:00 UTC
Reading time: 21 minutes

The pandemic has clearly accelerated the adoption of digital health and virtual care around the globe, and this will be seen through this decade. Healthcare providers will be seen embracing technology as never seen before. Healthcare delivery is no longer restricted to the four walls of hospitals. All of this could impact healthcare stocks.

In addition, virtual care may pick up steam as growth is boosted by telehealth leaders offering platforms and end-to-end solutions for at-home care. As a result, investors' attention may be turning healthcare stocks more and more in the coming decade.


Should I Invest in Healthcare Stocks?

In fact, healthcare stocks rank third after the technology and finance sector in the S&P 500 index. However, even for a sector that appears extremely appealing, it's important to make informed investment decisions using the right analytical tools, and remain updated with the latest news and economic announcements within the sector.

And this really is a large sector that goes far beyond hospitals and pharma companies. If you are thinking about which medical stocks to invest in and are looking for answers to some key questions about this market, you are in the right place.

We'll start with a list of the types of medical stocks to invest in. Here's a look at the various types of companies you can choose from when searching for the best healthcare stocks to invest in.

Types of Healthcare Shares

Pharmaceutical Companies

Pharmaceutical companies produce almost all over-the-counter (OTC) and prescription drugs. Large pharmaceutical firms are usually less risky to invest in, as compared with their younger or smaller counterparts. These companies spend a major portion of their resources on R&D (Research & Development), to bring innovative treatments to the market.

So, if a company releases a new drug with huge earning potential, its stock will perform well. You may find a small group of healthcare shares collectively called "Big Pharma," which consists of the large cap pharma companies. However, even when investing in 'Big Pharma', you should have knowledge concerning:

  • The scope of the drugs
  • The scale of the people affected by the disease the drug addresses
  • The availability of substitutes and drugs by competitors
  • Intellectual property rights related to the process of manufacturing and the drug's patent
  • Profit and revenue division pacts with other companies

The clinical trials conducted before a drug is launched, and their outcomes, also affect share prices in the healthcare segment. Positive outcomes tend to drive prices up, while negative outcomes could even potentially lead to a crash. Investment in pharma companies, therefore, requires active analysis by investors.

Healthcare Services

Hospitals and clinics are the foundation of any healthcare system. Therefore, when their stock is available for investing in, they do tend to offer good investment potential. Here, too, the larger companies, such as Acadia healthcare stock, would offer more stable potential and lesser risk. Of course, risk is always a part of any investment, and using good risk management strategies is vital.

Healthcare service providers are subject to enormous regulatory risks. Hospitals often make quick and costly hardware, and software changes for better facilities, and to attract more patients. This might, however, make the hospitals prone to bad debt, and may also affect their dividends.

Medical insurance firms are also an important player in the healthcare services sector. They pay the bills, so, the better the underwriting, the lower the medical costs incurred by the insurance company will be.

This is why it's important to analyse the medical cost ratio, and medical loss ratio before investing in such healthcare sector stocks. The insurance industry is also highly volatile, due to changes that take place in regulatory frameworks. However, investing in these stocks tends to be less volatile than investing in hospital stocks.

If you want to invest in medicine and you choose this area, it is important that you need to keep an active eye on the regulatory framework to minimise losses associated with these stocks.

Medical Device Stocks

With increasing life expectancy, medical devices are becoming more important than ever before. Medical device firms generally witness a slow growth rate. The products offered by them range from bandages to artificial joints, and from digital blood pressure monitors to heart stents, and much more. Such devices will always be in demand, but an instant boom of any specific device is unlikely.

These firms, also spend a large share of their resources on R&D, as well as the stages after R&D. Here, there are older, more stable firms, as well as small startups with great growth potential. Healthcare software providers offer greater potential for growth than hardware manufacturers. Today, hospitals worldwide are adopting automated systems to offer better services to patients.

On the other hand, advances in technology are bringing AI and robotics into the healthcare system, changing the way medical care is provided. You need to study the technology, the substitute products, and the competitors of a firm before investing. Adoption rates and gross margins typically determine the success of these healthcare technology stocks.


Investment in biotechnology stocks is generally considered high yielding, although it does entail risks as well. You may also consider investing in stocks of companies that are involved in R&D for the treatment of chronic and terminal ailments, such as cancer, AIDS, diabetes, heart disease, neurological diseases, immunological diseases, viral infections, stem cell and tissue regeneration.

If these projects are successful, they will greatly impact the lives of people worldwide, which in turn would drive up the share price. You might even consider investing in companies with a strong network of collaborative support, indicating that it is financially and logistically stable.

Biotech stocks nearing the end of their R&D stage, or awaiting approval from the regulatory authorities are also likely to be better investment options. However, remember that if the clinical trial fails to produce the desired outcome or there are regulatory hurdles, the share price might decline.

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What Healthcare Stocks to Buy Now? A List of Major Stocks

What is the best healthcare stock to buy now? What are the top healthcare stocks? We can't say which is the best healthcare stock to buy, or which is the top healthcare stock. The answer to this question is a matter of personal preference and will differ from trader to trader. However, we can provide a list of healthcare stocks traders invest in:

  1. 1Life (NASDAQ:ONEM): The company '1Life' does business under the name One Medical. It's a chain of primary healthcare clinics based in San Francisco. It is a membership-based service with both in-person care services and online resources. Online resources include a mobile app. One Medical's founder is Tom Lee, who started the company in 2007. It grew from one San Francisco clinic to over 72 locations all across the USA. On January 31, 2020, One Medical started trading shares in their company on the Nasdaq stock exchange.
  2. Acadia Healthcare (NASDAQ:ACAD): The company, 'Acadia Healthcare' is a behavioural healthcare provider operating internationally. It has a network of more than 584 locations throughout the United Kingdom, United States and Puerto Rico. Acadia focuses on providing addiction and behavioural health services in various settings. Acadia was created in January 2005, and has headquarters in Franklin, Tennessee.
  3. Vertex Pharmaceuticals (NASDAQ:VRTX): Vertex shines as a top biotech stock. The company focuses primarily on the development of drugs to treat the root cause of cystic fibrosis (CF), which is a rare disease that damages organs in the body, such as the lungs. Their latest drug Trikafta may increase the number of people their drugs can treat. Vertex is also in the process of developing drugs to treat other rare genetic diseases.
  4. Intuitive Surgical (NASDAQ:ISRG): This is a great example of a healthcare company with advanced technology. Intuitive Surgical's da Vinci surgical system is a robotic system that's been used in over 7 million procedures since 1999. While the pandemic hurt their business by reducing the number of elective surgeries, the vaccine rollout could create an environment for Intuitive to recover.
  5. UnitedHealth Group (NYSE:UNH): UnitedHealth is one of the largest health insurance companies in the world. Some traders are attracted to their stock due to their stability, dividends and size of the company.
  6. Teladoc Health (NYSE:TDOC): Teladoc is a popular healthcare stock. They are another example of a company offering their services via modern technology. They offer healthcare services, remotely, via the internet and phone. The company acquired Livongo Health in 2020, which gave them a platform for remotely assisting people with chronic conditions. The COVID-19 pandemic has boosted virtual care services. Even after the COVID-19 pandemic ends, individuals and companies in the healthcare market may still be looking to cut costs. Delivering healthcare services remotely is one way to do this.

Other major healthcare stocks to consider are:

  1. Allied healthcare stock
  2.  AMN healthcare stock 
  3.  Andlauer healthcare group stock
  4.  GE healthcare stock 
  5.  Genesis healthcare stock 
  6.  HCA healthcare stock 
  7.  Molina healthcare stock 
  8.  Omega healthcare stock 
  9.  Ryman healthcare stock 
  10.  Tenet healthcare stock 

These are some large healthcare-related companies offering shares.

Healthcare Penny Stocks: Cheap Healthcare Stocks

Below are some healthcare penny stocks to consider:

  1. Revive Therapeutics (OTC:RVVTF): Revive has a focus on finding treatments for rare diseases and infections.
  2. Antares Pharma (OTC:ATRS): This specialty pharmaceutical company. Their focus is on developing and commercializing self-administered parenteral pharmaceutical technologies. Their products include: OTREXA, Makena, Elestrin and others.

It's always important to remember that a trader's ability to earn a profit depends on their skill level. It is impossible to predict whether or not these stocks mentioned in this article will give you a return on your investment.

It's also important to remember that when investing in healthcare penny stocks, such stocks are often traded on over the counter exchanges, which are not as heavily regulated as traditional stock markets like the London Stock Exchange or the NASDAQ. Because of this, these markets can be riskier and traders should decide if they can afford to take on such a risk before buying shares on these markets.

Healthcare Dividend Stocks

The following companies operating the healthcare market have been paying dividends for over 10 years. Some traders consider these healthcare dividend stocks:

  1. AbbVie (NYSE:ABBV): This biopharmaceutical company came from Abbott Laboratories back in 2013, spinning off into their own company. They are well known for one of the world's top-selling drugs, Humira. Humira treats Chron's disease, arthritis and ulcerative colitis. Humira generated $19.8 billion in revenue in 2020.
  2. Johnson & Johnson (NYSE:JNJ): This is one of the older businesses on this list of healthcare stocks. Johnson & Johnson has been around for more than 130 years. In 2020, the company shifted its focus to the COVID-19 pandemic, and eventually produced one of the top 3 vaccines for the virus.
  3. UnitedHealth Group (NYSE:UNH): Although UnitedHealth Group is still young compared to the other companies on this list, it has been publicly traded for more than 35 years and has one of the largest employee bases of other companies in this sector: 330,000.

These are not the best healthcare dividend stocks. They are merely some of the popular healthcare dividend stocks.

How to Analyze Healthcare Stocks

How can you find the best healthcare sector stocks to buy? There are four key things to look for:

1. Growth prospects

One of the most common factors traders consider when deciding which company to invest in is the company's growth prospects. You can do this by finding out how fast their revenue has grown over the past years. While this, alone can't determine if the company will grow in the future, it may help you determine whether or not you feel confident in the company's prospects.

2. Financial strength

You can look into the regulatory filings companies make to the SEC. These documents include financial statements that can help you analyse and determine the financial strength of a specific business. Many traders search for companies that are already profitable. If a company isn't already profitable, some traders attempt to understand how the company plans to become profitable and how long it will take to achieve it.

3. Valuation

Many traders want to know how much a company is worth before buying its stock. Finding the valuation of a certain healthcare stock can help you determine if you are paying a fair price.

There are several valuation metrics you can use. A common one traders use is the price-to-earnings (P/E) ratio. This measures the price of a specific stock relative to its earnings per share.

Some P/E ratios look back to reflect a company's earnings over a past period (ie. the past 12 months). A forward-looking P/E ratio uses earnings estimates for the year ahead. Traders can compare P/E ratios of one stock with others within that industry to help them decide if that stock is cheap or expensive.

4. Dividends

Some healthcare stocks will pay their shareholders dividends, like the examples we listed, above. Traders sometimes refer to such stocks as healthcare dividend stocks. This is an amount of the company's earnings that they give to their shareholders. Dividends can sometimes boost a trader's overall return they gain from owning shares.

What Are the Risks of Investing in Healthcare Stocks?

If you wish to invest in healthcare stocks, there are a few points to keep in mind. The medical sector has a complex nature, and without understanding how a business operates or what they do, you will need to research before investing in them.

Many traders who buy healthcare stocks also pay attention to government legislation. Large policy changes can set off volatility in the healthcare market. Additionally, the FDA can make decisions that can boost or damage pharmaceutical companies. Traders who invest in healthcare stocks often pay attention to changes in government regulation and political shifts.

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3 Ways to Invest in the Healthcare Sector

Here are 3 common ways to invest in the healthcare sector:

1. Big Pharma Companies

Investing in companies with large market capitalisation tends to be less risky. They don't offer explosive growth, but they do have stability.

2. Healthcare Real Estate

With an increasing demand for healthcare, there will also be a need for more hospitals, labs, and clinics to meet the demand. Healthcare real estate investment funds, therefore, prove to be a viable option for investment. However, remember to research the credit ratings of the REITs before investing in one.

Some examples of REITs include:

  • Alstria Office REIT-AG CFD (AOX)
  • Hamborner REIT AG CFD (HAB)
  • Tritax Big Box REIT Plc CFD (BBOX)

3. Healthcare ETFs

If you are unsure about investing in individual health care stocks, you could also consider investing in healthcare ETFs. Healthcare ETFs are designed to track the performance of the healthcare sector, and provide an easy way to gain exposure to the sector, without having to know much about the individual companies. ETFs include health insurance and managed-care companies, along with associated businesses, such as pharmacy benefits management, and treatment providers.

Here are some examples of healthcare ETF CFDs:

  • iShares Global Healthcare ETF CFD (IXJ)
  • iShares U.S. Healthcare ETF CFD (IYH)
  • iShares U.S. Healthcare Providers ETF CFD (IHF)

Diversification is important for any investment portfolio, and healthcare offers great potential in this regard. Investing in healthcare shares can provide good returns, but it also has various risks attached to it. This sector offers several options and sub-sectors to choose from for your investment, so picking the right investment instrument is the first step to success.

Are Healthcare Stocks Cyclical?

Are healthcare stocks cyclical? Traders consider healthcare stocks as non-cyclical. Some often claim that the healthcare market, composed of pharmaceutical companies, medical insurance businesses and providers of healthcare services, tends to be more resistant to recessions and more resilient in bad economic periods.

Some traders may see this as common sense. For example, it may seem logical that people won’t cancel their health insurance plan due to an economic recession. While people may cut back on some expenses, some traders believe that people will continue to buy their necessary drugs and medical services even during difficult economic times. Because of this belief, many traders put healthcare stocks in the non-cyclical category.

Are Healthcare Stocks Defensive?

Are healthcare stocks defensive? Traders often consider non-cyclical stocks to be defensive. A defensive stock is one that provides stable earnings and consistent dividends regardless of whether there is an economic boom or recession. As such, many traders consider healthcare stocks to be defensive.

Are Healthcare Stocks Value Stocks?

Are healthcare stocks value stocks? Many traders consider large, established companies with a long history operating in the healthcare sector, such as generic drug manufacturers, healthcare Insurers and service providers, as classic value companies. As such, some traders consider several of the companies in the above list to be value stocks:

  1. Johnson & Johnson(NYSE:JNJ)
  2. UnitedHealth Group (NYSE:UNH)

However, traders often see biotechnology and small device and drug development companies as being growth stocks.

Is Now a Good Time to Invest in Healthcare Stocks?

Is now a good time to invest in healthcare stocks? What is the future of healthcare stocks? As we have discussed above, the healthcare market is one of the largest and complex sectors and includes a wide range of businesses.

The onset of the COVID-19 pandemic led some companies to focus on finding different ways to administer health care services. Many companies have been focusing on developing a vaccine for the coronavirus. Several of them already received regulatory approval for their vaccines and have been distributing them.

Others are still focusing on developing and getting approval for other drugs to help treat victims of the coronavirus. Still, other companies have developed and continue to develop testing methods for the coronavirus. Because several companies in the market have been developing and providing healthcare services in new ways, some traders consider it a good time to invest in the right healthcare stocks.

However, it is not possible to predict the future of healthcare stocks. It is important for every trader to perform thorough research as to which stock is best suited for them to invest in. Admirals cannot guarantee returns on any of the stocks mentioned in this article.

What is a Healthcare ETF?

What is a healthcare ETF? What is the best healthcare ETF? Before we provide examples of healthcare ETFs, we must first define what an ETF is.

An ETF (exchange traded fund) is a type of security that follows a sector, commodity, index or another asset, but which traders can buy or sell on a stock exchange just like a regular stock. An ETF can be set up to track the price of a specific asset or for a diverse range of assets. An ETF can even be set up to track a particular investment strategy.

Healthcare ETFs (exchange traded funds) are funds that invest in a group of stocks from businesses that provide healthcare services, develop drugs or medical equipment, provide medical insurance or are involved in any of the many other areas of the healthcare sector.

While we can't guarantee which is the best healthcare ETF, we can provide a list of healthcare ETFs:

  1. Fidelity healthcare ETF
  2. Global Healthcare ETF
  3. Harvest Healthcare Leaders Income ETF
  4. Healthcare Reit ETF (Healthcare real estate investment trust)
  5. Healthcare Technology and Innovation ETF
  6. Invesco DWA Healthcare Momentum ETF
  7. iShares Global Healthcare ETF (Sometimes referred to as the iShares Healthcare ETF)
  8. iShares MSCI World Health Care Sector UCITS ETF
  9. Lyxor MSCI World Health Care TR UCITS ETF
  10. Principal Healthcare Innovators Index ETF
  11. Health Care Select Sector SPDR Fund (Sometimes referred to as the SPDR Healthcare ETF)
  12. Vanguard Health Care ETF

The above ETFs are common ETFs that traders invest in. They may be of interest to you, depending on your preferences, trading style and risk tolerance.

What Are AI Healthcare Stocks?

What are AI healthcare stocks? To understand AI in healthcare, we need to first understand what AI is. While computers excel at performing calculations, not all of them can do what humans do with ease: language processing, manipulating and moving objects, reasoning and others. AI (Artificial intelligence) uses computers to complete tasks that usually demand human intelligence.

Therefore, an AI healthcare stock is a stock in a company that operates in the healthcare sector and offers a product or service that incorporates AI.

Final Words

The healthcare sector is quite dynamic and complex. This can be a joy for some traders and a nightmare for others. If you are one of our readers who has decided to buy health care shares, we recommend employing a sound trading strategy based on education and experience, as well as a sound risk management plan.

Now that you understand what kind of healthcare stocks you can choose from, what companies are out there, some cheap healthcare stocks, which ones are considered cyclical and more, we wish you luck in making your decision on which shares in the healthcare sector you'll invest in.

Once you've decided which health care stocks to invest in, it's time to find out where to invest in healthcare stocks and what tools to use.

How to Buy Healthcare Shares: Start Investing in Healthcare Stocks With Admirals

If you're new to the sector, you may consider investing in big-cap firms or healthcare ETFs to start with. You should also consider using online analysis tools to monitor the movement of stocks in the healthcare sector.

Luckily, Admirals can offer such tools, as well as, FREE real-time market data, complementary premium quality market updates, low transaction commissions, and no account maintenance fees with its premium investing account - Invest.MT5. Trade on 15 of the world's largest stock exchanges, with thousands of stocks and ETFs to choose from. Open your account today by clicking the banner below!

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