Viagra to Vaccines: 8 Healthcare Favorites for 2022

Healthcare remains top of mind for individuals and businesses as we enter a third year of the pandemic. Investment experts participating in our MoneyShow Top Picks 2022 report are also focused on healthcare stocks as favorite opportunities for the year ahead. Here are eight ideas for healthy portfolio gains in 2022, ranging from diagnostics to medical devices and medical marijuana to drug development. Gordon Pape, Internet Wealth Builder Everyone knows about Pfizer these days; it was the first company -- along with partner BioNTech -- to have a Covid vaccine approved for general use. Their vaccine has proven to be highly effective with minimal side effects and now Pfizer has developed an anti-viral oral drug -- Paxlovid -- to combat the coronavirus that recently received FDA emergency approval. Pfizer is increasing its quarterly cash dividend by 2.6% to $0.40 for the first-quarter 2022 dividend, payable March 4. This will be the 333rd consecutive quarterly dividend paid by the company. The yield is around 3%, after the latest increase. Pfizer is the hottest name in pharmaceuticals right now. Demand for its vaccines will continue to grow at least through 2022 and perhaps beyond as it's becoming increasingly apparent that annual boosters will be needed, just as with the flu shot. Its new drug, Paxlovid, will probably be the first of a new line of anti-viral medications. While we've already seen a significant price increase in the stock, I think there's another 30-40% upside potential over the next year, with limited downside risk. Pfizer is my conservative pick for 2022. Ben Reynolds, Sure Dividend Viatris -- a growth-oriented idea for 2022 -- is a relatively new health care company. It was formed in November 2020 in a merger between Mylan and Pfizer's Upjohn business unit. The company's well-known products include Viagra and Dymista. We expect adjusted earnings per share of $3.80 in full fiscal 2021. This means that Viatris was recently trading for very low valuation multiples of 0.9x revenue; 2.5x adjusted EBITDA; 6.4x free cash flow and 3.6x Adjusted EPS. Overall, Viatris looks incredibly cheap based on its valuation multiples. This may be due to unwarranted selling pressure that often occurs with spin-offs. Another potential reason for the company's modest valuation is likely its high level of debt. Viatris currently has $19.9 billion in long-term debt on its books. But the company is actively deleveraging; long-term debt was $22.4 billion at year-end 2020. The company's management proactively repaid $1.9 billion in long-term debt in fiscal 2021 and plans to repay $6.5 billion by 2023. The company's aggressive deleveraging is made possible by its strong free cash flows. Viatris looks very interesting from a total return perspective. The downward pressure on the security will likely be reduced as the company continues to deleverage. We believe Viatris will command a significantly higher price-to-earnings ratio over time. Viatris's quarterly dividend is well covered by cash flows and gives shareholders a healthy 3.2% dividend yield at the current depressed share price. Mike Larson, Safe Money Report Abbott Laboratories is a top conservative idea for 2022. It is a Chicago-based company that offers medical testing, medical devices, pharmaceuticals, nutritional products and related services. You may be familiar with its Similac baby formula and Pedialyte beverages. It also makes FreeStyle Libre glucose monitoring systems, Gallant implantable heart defibrillators and Influvac flu vaccines. Abbott has also been at the forefront of the fight against Covid-19; it has been a leader in the rapid Covid-19 testing arena. Its ID NOW molecular test and the BinaxNOW antigen test allow for faster diagnoses than other tests that require lab work. They were invaluable during the multiple pandemic waves seen since early 2020, and they'll continue to be in high demand going forward. Abbott isn't a one-trick pony. That's why third-quarter 2021 sales jumped more than 23% year over year to $10.9 billion. Moreover, driven by solid performance in all four business segments, adjusted earnings surged almost 43% to $1.40 per share. Abbott paid a dividend of 45 cents per share per quarter as of late 2021. That was good for a yield of about 1.4% at its stock price back then. It was also up a hefty 26% from a year earlier. Add in the fact that ABT has earned a Buy grade from our Weiss Ratings system since February 2018, and you can see why it's at the top of my list of more conservative stocks to invest in for 2022. Chuck Carlson, DRIP Investor I like when Wall Street underestimates companies. It sets those companies up to beat expectations. PerkinElmer is one such company. Wall Street is forecasting a significant decline in profits and revenues for this leading testing and diagnostics company in 2022, as demand for the company's Covid-related services is expected to wind down significantly. However, given the recent surge in Covid, as well as PerkinElmer's penchant for beating Wall Street estimates, I think PerkinElmer stock will hold up just fine in 2022. A big plus is the transformation of the firm's business portfolio. The company has made some nine acquisitions over the last year or so, including the company's largest deal in history, BioLegend, a leading provider of life sciences antibodies and reagents. PerkinElmer estimates the acquisitions have greatly expanded its total addressable market. Fiscal 2023 should be an especially strong year, as PerkinElmer estimates that the assimilation of its many acquisitions and improved growth profile of its new markets will produce organic revenue growth in the high single digits. I think the stock will outperform the market in 2022 and beyond and recommend purchases. Prakash Kolli, Dividend Power Medtronic is the largest medical technology company globally, with $30.1 billion in sales in fiscal 2021 (~50% US and ~50% international). The company has struggled during the Covid-19 pandemic. The pandemic interrupted the long-term growth of elective procedures as patients stayed away from hospitals fearing the risk of infection, and hospitals diverted resources. In addition, the company has struggled with product approval delays and recalls. Furthermore, Medtronic received an FDA warning letter on its headquarters for the diabetes business, which may take two to three years to resolve. Despite the near-term challenges, Medtronic is positioned for future growth. The company spends more than $2.5 billion annually on R&D to build its extensive patent portfolio and conduct clinical trials for FDA approval. Medtronic had 200 product approvals in 2020, more than 190 approvals in 2021, and a robust pipeline for 2022. In addition, the company has invested in 40+ early-stage companies with potential for future acquisitions. Medtronic has paid a growing dividend for 44 years and is a Dividend Aristocrat. The forward dividend yield is ~2.42%. The relatively low payout ratio of approximately 50% leaves room for future increases. Moreover, the low payout ratio and the A stable / A3 stable investment grade credit ratings provide confidence for dividend safety. Medtronic's stock price was on a downtrend since late-August 2021 and is now trading just above the 52-week lows. However, earnings estimates may be low if elective surgeries return to typical growth rates and the company can deliver on its long-term goals. Investors should note that Medtronic is an Irish company for tax purposes. I view the stock as a long-term buy. Bob Ciura, Sure Dividend Bristol-Myers Squibb is a reliable dividend stock with a safe payout under any economic conditions. The stock has a hefty current yield of 3.5%. BMY also appears to be significantly undervalued, given its long-term growth potential. These qualities make BMY a top pick for income investors. Bristol-Myers Squibb is one of the world's largest pharmaceutical companies. It manufactures cardiovascular and anti-cancer therapeutics, with annual revenues of about $42 billion. The company's financial results have been impressive over the course of the year. In the 2021 third quarter, Bristol-Myers reported 10% revenue growth on a year-over-year basis. Adjusted EPS grew 23% from the same quarter last year. The biggest growth catalyst for healthcare stocks such as Bristol-Myers is the aging U.S. population, which should provide a long-term growth tailwind. Healthcare is also a highly recession-resistant sector, which makes BMY stock a top pick for risk-averse investors. Bristol-Myers should capitalize on the positive long-term growth catalyst because of its strong pipeline. Revlimid continued to be a strong performer for the company with 11% revenue growth, while Eliquis, sales grew 15% in the third quarter. The company has over 50 early stage assets in its product pipeline. With a 3.5% dividend yield and a recent P/E ratio below 9, we believe BMY is a deep-value dividend stock. In our estimation, the combination of future EPS growth, dividends, and an expanding P/E multiple could fuel annual returns above 15% per year. This makes BMY stock a top pick for 2022. (Disclosure: Bob Ciura is long shares of BMY.) Matthew Timpane, Schaeffer's Investment Research GoodRx is a misunderstood company that presents a great risk-to-reward opportunity for 2022. Since its IPO, the company has been expanding its platform from being a discount prescription provider to providing a well-rounded digital healthcare platform. GoodRx has largely been punished for this expansion, as capital expenditures increased +105.8% this past quarter, which ate into the earnings as it saw a decrease from 17.6% to -9.3% in net profit margins. I don't see this as a bad thing, however, as they are expanding their total addressable market by this move. On top of that, maybe investors forget that most of GoodRx's current top-line growth is converted into gross margins, which is currently around 94%. In other words, they are using their cash flow to expand strategically. With this expansion, we're also seeing growth in GoodRx's premium Gold service, with subscriber growth at 68% year-over-year (YoY) to $1.13 million and revenue from this segment growing at a clip of 111% YoY. Premium services should continue to drive growth as the platform expands, as it already provides additional discounts on medications and the ability to ship the subscription to your home. From a technical perspective, GoodRx stock is below all major moving averages, which is something I typically don't want to see. Regarding sentiment, short-interest is at an outstanding 21.01% of its outstanding float, which makes it ripe for a massive, short-covering rally in 2022. Nate Pile, Little River Investment Guide My Top Pick for 2022 is Innovative Industrial Properties , which is focused on the acquisition, ownership, and management of specialized properties leased to state-licensed operators of regulated medical-use cannabis facilities around the country. A REIT, it is a favorite investment thanks to not only the momentum of the stock over the past 12 months, but the momentum of the company itself as well. All signs point to the idea that cannabis will eventually be legalized at the federal level. And while it remains to be seen just how large the industry will eventually become before finally reaching equilibrium in various markets, the size of its real estate footprint is almost certainly only going to grow as time goes by. I believe Innovative Industrial Properties' momentum and management's expertise in the sector makes it extremely well-positioned to cash in on the trend as more and more entrepreneurs attempt to get into the cannabis game. While there will undoubtedly be ebbs and flows in the cannabis business cycle along the way, I believe the odds are good that the company will continue to manage its properties in a prudent and profitable way as time goes by. The REIT currently pays a quarterly dividend that works out to $6.00 per year.

Viagra to Vaccines: 8 Healthcare Favorites for 2022

Investment experts pick their favorites in the sector for 2022, ranging from diagnostics to medical devices and medical marijuana to drug development.

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