Healthcare makes up nearly one-fifth of the U.S. economy. And with the country’s aging demographics, the healthcare sector will almost certainly continue to grow. As you might expect, such a large and expanding area presents lots of opportunities for investors.
We asked three Motley Fool healthcare contributors to weigh in on which stocks they think are great picks for long-term investors right now. Here’s why they selected CVS Health
This compelling value stock is cheaper than it’s been in a long time
Sean Williams (CVS Health): One of my favorite things to do as an investor is the exact opposite of everyone else. That’s why CVS Health, which has struggled mightily of late, is my top healthcare stock to buy this month.
Following the release of its fourth-quarter and full-year results on Wednesday, Feb. 20, CVS Health’s stock dived. The integrated health giant laid out a series of concerns, including higher costs to fully integrate its $70 billion Aetna acquisition, uncertainty regarding drug rebates, and worries about drug-price reform and a lack of brand-name drug inflation. All told, given higher expensing and some core business uncertainties, CVS Health forecast full-year EPS for 2019 between $6.68 and $6.88, which was notably lower than the $7.41 that Wall Street had been looking for.
Some folks might call this a perfect storm of bad news. I call it a fantastic buying opportunity for a company primed to reinvent itself.
To begin with, we’ve been hearing about the Trump administration’s attempts to curb prescription drug inflation for a while. However, nothing has ever come of this discussion, because there’s little consensus in a highly partisan and currently divided Congress. Drug-price reform is often much ado about nothing, and my belief is that investors are once again worrying about the possibility of shrinking pharmacy margins that are simply not in danger of declining.