3 best healthcare stocks to buy for March

Aafter the S&P500 The index has corrected 10% since the start of the year, so there is no shortage of stocks at attractive prices for long-term investors.

One sector that is full of cheap stocks is healthcare. This sector currently has a forward price-to-earnings (P/E) ratio of 15.1, which is well below the average forward P/E ratio of 18.6 for the S&P 500 index.

Here are three healthcare stocks that combine quality with attractive valuations to consider buying in March.

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1. CVS Health

The top healthcare stock to buy this month is the health insurance and pharmacy chain SVC Health (NYSE: CVS). With a market capitalization of $133 billion, CVS is the second largest health insurer in the world behind UnitedHealth Group (NYSE:UNH).

Due to ever-increasing healthcare costs and an aging population, the global health insurance industry is projected to grow by 4.6% per year, from $2.8 trillion in 2020 to $3.9 trillion by 2027. As a massive health insurer through its Aetna business, CVS Health will be able to capitalize on the growth of the health insurance industry better than almost any of its peers.

That’s why analysts expect CVS to grow its non-GAAP (adjusted) diluted earnings per share (EPS) by 6% annually over the next five years. And due to CVS’s promising fundamentals, the company’s board recently authorized a 10% increase in the quarterly dividend to $0.55 per share.

Dividend growth investors can take advantage of CVS Health’s market-beating 2.1% dividend yield at a forward P/E of just 11.7. For a stock of its quality, CVS Health appears to be trading at a favorable valuation at the moment.

2. Amgen

The next healthcare stock to think about buying in March is a pharmaceutical company Amgen (NASDAQ: AMGN). With a market capitalization of $125 billion, Amgen is the 10th largest pharmaceutical stock in the world.

For many of the same reasons that the health insurance industry will do well, the pharmaceutical industry will also show a healthy growth rate in the coming years. A burgeoning and aging global population is expected to drive the global pharmaceutical industry to grow by 4.7% annually, from nearly $1.3 trillion in 2020 to $1.6 trillion by 2025.

In addition to Amgen’s growing portfolio of blockbuster drugs like Prolia and Xgeva (for osteoporosis) and Otezla (for plaque psoriasis and psoriatic arthritis), the company’s pipeline is expected to fuel growth in the coming years. future. Indeed, Amgen’s drug pipeline includes 40 compounds in various stages of clinical trials.

These factors explain why analysts estimate that Amgen’s non-GAAP diluted EPS will grow 7% annually over the next five years. The company’s decent growth prospects should position it for steady, high-single-digit annual dividend growth over the medium term. Combined with Amgen’s market-leading dividend yield of 3.3%, this is an attractive mix of income and growth potential.

And investors can buy Amgen shares at a forward P/E ratio of 12.2, which seems like a discount to its growth prospects.

3. Sanofi

The latest healthcare stock to consider buying this month is the French drugmaker Sanofi (NASDAQ: SNY). Sanofi’s market capitalization of $122 billion makes it the 11th largest pharmaceutical stock on the planet behind Amgen. Like Amgen, Sanofi should benefit from ever-increasing global pharmaceutical spending in the future.

Sanofi also has a strong portfolio of steadily growing blockbusters, such as a co-owned drug with Regenerate (NASDAQ: REGN) called Dupixent (for eczema and asthma) as well as a variety of flu, polio and whooping cough vaccines. Thanks to its existing portfolio and its pipeline of 86 projects in various phases of clinical trials, analysts predict annual earnings growth of 10% for the next five years.

Despite Sanofi’s encouraging growth profile, the stock trades at a forward price-to-earnings ratio of just 10.9. The icing on the cake is Sanofi’s market-crushing 3.9% dividend yield, nearly triple the S&P 500’s 1.4%.

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Kody Kester owns Amgen, CVS Health and UnitedHealth Group. The Motley Fool recommends Amgen, CVS Health and UnitedHealth Group. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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