Investing Theory

Spotlight on Growth: The Rising Stars Best Health Care Stocks for 2024 Investments

October 12, 2023

In the search for 2024’s most promising healthcare investments, our focus turns to the industry’s emerging leaders. This analysis cuts through the noise to highlight “the rising stars best health care stocks for 2024 investments”, providing clear and data-backed insights into their future prospects.

Several healthcare companies such as Steris, Eli Lilly & Co, and DaVita Inc are promising investment opportunities in 2024, with growth opportunities and stability attributed to factors like robust dividend growth, diverse services, and technology-enabled health solutions.

So let's dive deeper into these issues - and take a decidedly closer look at each of these companies!

Top Health Care Stocks Set to Soar in 2024

The health care sector’s robust performance is no fluke. Over the past five years, it has consistently outperformed the S&P 500, boasting a sturdy 4.7% increase (as of February 2024) since the start of 2024. Amid this sector-wide growth, several healthcare companies have shone brightly, achieving double digit revenue growth in the fourth quarter. Companies like Steris have seen a surge in revenue, while others like AbbVie have significantly bolstered their dividends.

Over the past decade, a lot has been happening in the health industry: typical pharmaceutical companies have developed, of course, but also robotics in surgery, the use of AI in medicine or the results of vaccine sales skyrocketed due to the Covid 19 pandemic. Potential growth has exceeded all expectations - so it's no wonder that investors' eyes will turn to this industry as well.

These stock picks reflect the vibrant diversity in the healthcare sector, including:

Each of these companies represents a unique blend of growth opportunities and stability, making them excellent candidates for investors looking to buy healthcare stocks.

Of course, these are not the only options to consider when adding to your portfolio. We have found something even more promising for you. If we already have your attention - be sure to take a peek at the paragraphs below! 👇

UnitedHealth Group: A Market Leader

UnitedHealth Group stands as a testament to the potential of the healthcare sector. Recognized as the largest health insurer, it has firmly established itself as a market leader in the health care industry. Its diverse offerings and robust growth are not just a result of its size, but also the strategic approach the company has taken.

UnitedHealth Group: analysis from the Scrab tool.

The company’s Optum business segment is driving this growth. It provides information- and technology-enabled health services, including OptumRx pharmacy benefits management. The combination of cost savings, a diverse array of healthcare and specialty pharmacy offerings, and an overall increase in healthcare spending due to an aging population further amplifies UnitedHealth Group’s revenue growth. Pharmacy benefit managers play a crucial role in this process.

Vertex Pharmaceuticals: Pioneering Gene Therapy

Vertex Pharmaceuticals, one of the leading drug companies, is another shining star in the healthcare sector, with a strong focus on gene therapy and cystic fibrosis treatments. The company’s innovative approach to medicine has positioned it as a pharmaceutical giant, promising robust revenue growth.

Vertex Pharmaceuticals: analysis from the Scrab tool.

One of the key drivers of Vertex Pharmaceuticals’ financial success is their cystic fibrosis franchise, with the CF therapy Trikafta/Kaftrio leading the pack. In addition, the company’s partnership with CRISPR Therapeutics in the development of the gene therapy Casgevy, aimed at treating sickle cell disease and transfusion-dependent beta thalassemia, demonstrates their commitment to pioneering medical advancements.

Intuitive Surgical: Revolutionizing Surgery

Intuitive Surgical has been revolutionizing the landscape of healthcare with their pioneering approach to robotic-assisted surgeries. The company’s revenue reached a substantial $7.12 billion in 2023, indicating a strong growth trajectory.

Intuitive Surgical: analysis from the Scrab tool.

The company’s ecosystem features advanced digital tools, including surgical simulators, the My Intuitive app, and the Intuitive Hub media management and telepresence system. These innovative tools, combined with their groundbreaking approach to surgery, have positioned Intuitive Surgical at the forefront of the healthcare sector.

Teladoc Health: Transforming Healthcare Delivery

Virtual healthcare is on the rise, and Teladoc Health is leading the charge. The company has successfully enrolled more than 1.1 million active users in its chronic care programs, showcasing its leadership in this burgeoning sector.

Teladoc Health: analysis from Scrab tool

Teladoc Health extends beyond mere treatment, embracing a holistic strategy that places a strong emphasis on managing chronic health conditions effectively. This approach, combined with the addition of nearly four million patients to Teladoc Health’s virtual care programs, has resulted in substantial growth in user adoption.

Psst... The charts below are a real analytical game changer for you? Then we have good news - in Scrab, all these companies (and more) can be compared in a second using a fully customizable scoring model!

Stock Comparison - screen from Scrab tool.

Evaluating Health Care Stocks: Key Metrics and Factors

Before jumping headfirst into the healthcare stocks pool, it’s crucial to understand the key metrics and factors that are critical in assessing a health care company’s potential. The cash flow coverage ratio, long-term debt-to-capitalization ratio, and operating margin are essential in determining a company’s capability to cover debts and its profitability from core operations before interest and taxes.

Revenues and earnings growth are also essential for evaluating health insurance companies. For medical supply companies, patents provide market exclusivity, leading to stable market share and the ability to charge premium prices. Consumable medical items typically generate steady revenues and high levels of free cash flow. With these factors in mind, investors can make informed decisions when choosing the best healthcare stocks to buy.

You'll also note that for drug companies, often more important than historical financial performance can be current news about progress with new drugs and the FDA approval process, like moving to the next phase of clinical trials or not. Such drug companies react very strongly to this issue, and it is definitely a key factor to consider when deciding on portfolio changes.

Risks and Challenges Facing Health Care Stocks

It’s important to be aware of the risks and challenges facing health care stocks. These include various political and regulatory risks, including the impact of healthcare reforms and the necessity for medical products and services to gain FDA approval. Health insurance companies face unique challenges due to regulatory changes, reimbursement pressures, and the unpredictability of medical costs.

Moreover, despite being seen as stable and potentially recession-resistant, broad economic downturns can lead to reduced health care spending, which in turn affects the performance of health care investments.

The health care sector also faces industry-specific risks such as:

  • the high costs and uncertainties of clinical trials, which could result in significant financial losses for investors if the trials fail
  • regulatory changes and government policies that can impact the profitability of health care companies
  • competition and pricing pressures from other companies in the industry
  • technological advancements that could disrupt traditional health care models

It is important for investors to consider these risks when making investment decisions in the health care sector, especially in light of the Affordable Care Act and its impact on healthcare providers and healthcare services.

Diversification and Stability: Medical Supply Companies and Health Insurance Providers

To mitigate the impact of underperforming stocks and add diversification to your portfolio, consider investing in multiple healthcare companies or subsectors, including medical supply and health insurance providers. Health insurance stocks are a secure choice for investors in the stock market, considered a stable component of the healthcare market and essential to Americans.

Within the medical supply sector, there are subdivisions such as medical supply companies and medical device companies. Major companies like Medtronic operate across various segments, including cardiovascular and neuroscience, offering a comprehensive cross-section of the industry.

Emerging Trends in Health Care: Opportunities for Investors

Emerging trends in healthcare present new growth opportunities for investors. Technological advancements, particularly in telemedicine, AI-driven diagnostics, and wearable health devices, are disrupting traditional healthcare business models and offering new investment opportunities.

The sustained growth in the health care sector is driven by an aging population and advancements in medical technology and pharmaceuticals. Medical equipment companies, for instance, showcase strong long-term investment potential, supported by the projected 9.5% CAGR of the global surgical robots market through 2030.

Thus, it's worth keeping your hand on the pulse of the industry - and watching with bated breath as new technologies and AI shape the new era of robotic medicine.

Surgical Robots Market Size by Grand View Research.

Strategies for Investing in Health Care Stocks

When it comes to investing in health care stocks, it’s crucial to have a strategy. A balanced portfolio should mix large-cap health care stocks, which are generally less volatile and more likely to pay dividends, with smaller biotech firms offering the potential for higher returns.

Diversified investment portfolios, including those in healthcare, tend to outperform and exhibit greater resilience during market downturns. It’s also crucial to regularly review and recalibrate your portfolio to stay aligned with market dynamics and your individual appetite for risk.

ETFs for Health Care Stock Exposure

For those looking to gain diversified exposure to the health care sector, ETFs offer a convenient solution. These funds allow investment in a wide range of healthcare-related stocks with a single purchase.

Prominent healthcare ETFs available to investors include the Health Care Select Sector SPDR Fund and Vanguard Health Care Index Fund ETF.

For targeted investments, ETFs like:

provide exposure to specific sub-sectors such as biotech, medical devices, and pharmaceuticals.

Psst... Hey, did you hear? Scrab now offers new tools for managing your ETFs! Traditionally, investors look at things like expense ratios and dividend distribution when choosing ETFs. But with Scrab, you get even more detailed insights.

You can see how your ETFs are diversified across different countries and industries, check out their major holdings, and even delve into fundamental metrics from the companies within the ETFs. This feature lets you quickly compare ETFs that cover the same regions or sectors.

ETFs analysis - screen from the Scrab tool.

You can easily spot which ETFs have companies with the best margins, lowest debt, or fastest revenue growth. Plus, all these metrics are calculated automatically at the ETF level, saving you from having to analyze each individual company within the ETF.


In conclusion, the health care sector offers an array of investment opportunities, from large-cap health insurance companies to innovative biotech firms.

Understanding key metrics and factors for evaluating health care stocks, being aware of the risks and challenges, and tailoring your investment strategy according to market dynamics and risk tolerance are crucial steps towards successful investing in this sector.

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