Best Hospital Stocks To Buy: The past year has been tough for the healthcare industry as a whole. The pandemic pushed certain healthcare workers and hospitals to their limits, but large groups were left behind.
While COVID-19 took center stage, patients put off preventative and elective care. Outside of emergencies, medical staff specializing in non-virus areas of practice struggled to get patients in the door. Overall, health care stocks grew just 11 percent, while S&P 500 added more than 15 percent.
The challenges associated with the pandemic depressed growth in hospital stocks for a period, but most analysts believe these companies are about to take off.
COVID-19 vaccinations are well underway, and all Americans who want the shot should have access by the end of May. That means a return to business-as-usual, plus an added boost as hospitals start to handle pent-up demand for preventative and elective care.
Those factors, combined with the standard advantages of healthcare stocks, such as increases in spending as the population ages, make investing in hospital stocks a smart decision for 2021. These five options are at the top of our “best hospital stocks to buy” list.
Encompass Health Ranks Among Top US Companies
Encompass Health Corporation (EHC) is dedicated to helping patients recover after acute illness or injury.
This network of hospitals focuses on inpatient rehabilitation, home-based health support, and hospice. It was named to Fortune’s 2021 list of Most Admired Companies for its high-quality management, exceptional patient care, and position as an employer-of-choice.
The organization’s footprint includes 39 states and Puerto Rico. Within the Encompass Health Corporation network, there are 137 hospitals, 82 hospice locations, and 241 home health agencies.
Throughout these facilities, healthcare providers use customized treatment plans and enhanced standards of care to ensure the best possible outcomes for each patient.
Analysts favor Encompass Health Corporation stock for its ability to adapt and thrive in the constantly-changing healthcare market. It has demonstrated an ability to remain consistent through economic cycles, and it has taken frequent regulatory changes in stride.
The business delivers patient outcomes that exceed industry standards without putting profitability at risk. In fact, treatment for Encompass Health Corporation patients tends to cost less than treatment at competing facilities, because Encompass health enjoys economies of scale – not to mention savings associated with the integration of advanced medical technology.
In short, Encompass Health Corporation stock includes all of the characteristics that make healthcare stocks a strong buy.
HCA Healthcare Operates 180+ Hospitals
HCA Healthcare (HCA) is a large network of hospitals and other healthcare facilities dedicated to meeting patients’ day-to-day medical needs.
In total, HCA operates 180 hospitals and more than 2,000 other sites that include freestanding emergency rooms, surgery centers, urgent care centers, walk-in clinics, diagnostic and imaging centers, and physician clinics.
HCA properties are located in 21 states, as well as in the United Kingdom.
The company has more than 280,000 employees who have approximately 35 million patient interactions per year. HCA Healthcare capitalizes on the sheer volume of patient data available through those interactions to develop best-in-class practices, protocols, and advanced technologies.
HCA is admired within the healthcare industry and the communities it serves because giving back is a central pillar of its core mission. HCA shares information on effective protocols and enhanced technologies with its industry peers and government agencies.
In addition, it contributes billions in uncompensated care for uninsured and underinsured patients.
With the exception of a period between March 2020 and June 2020, HCA Healthcare stock prices have risen steadily.
The company has found a balance between providing high-quality care, keeping healthcare affordable, and turning a profit along the way. That, coupled with the likelihood of industry-wide growth over the next 12 months, means HCA is well-positioned to deliver shareholder returns.
Select Medical Holdings A Star Performer
Select Medical Holdings (SEM) is in the business of supporting the recovery of patients after acute illness or accident.
It is made up of 99 critical illness recovery hospitals, 30 rehabilitation hospitals, and 1,778 outpatient rehabilitation clinics.
In addition, Select Medical operates joint venture subsidiary Concentra, which includes a total of 517 occupational health centers. The organization’s footprint spans 46 states and the District of Columbia.
Overall, Select Medical Holdings saw an unusual pattern of growth in 2020. This is primarily attributed to the changes in patient behavior during the height of the pandemic.
Revenue increased 1.4 percent year-over-year, and income from operations went up by 20.3 percent. That is due in part to payments received from the Provider Relief Fund. Net income increased by 71.4 percent year-over-year for a total of $344.6 million.
In mid-November 2020, as news of impending vaccine approvals spread, Select Medical Holdings stock regained its pre-pandemic value. It has been trending upward ever since, and analysts believe that trend will continue through 2021 and beyond.
Brookdale Senior Living Rated #1 By J.D. Power
The need for high-quality senior living facilities can’t be overstated. The population is aging, and living alone isn’t the right choice for many elderly people.
Brookdale Senior Living (BKD) is a leading provider of independent living, assisted living, memory care, and skilled nursing homes. It also offers home health care and hospice services to ensure continuous support post-retirement.
Brookdale Senior Living is regularly recognized for excellence in resident care. Most recently, it tied for first place in the J.D. Power 2020 U.S. Senior Living Satisfaction Study. That is due, in part, to the organization’s commitment to creating communities within its 700+ facilities.
Most Brookdale Senior Living centers offer graduated care options, so residents aren’t required to move when they need more support. The ability to maintain consistency within communities has been shown to have a positive impact on residents, making Brookdale a top choice for those responsible for choosing post-retirement living arrangements.
Brookdale stock had been fairly steady in the two years leading up to the pandemic. When the market crashed in March 2020, share prices dropped precipitously.
The economic turmoil that followed has resulted in a slow recovery for Brookdale’s share prices. Many families reconsidered group-care facilities in light of the rapid spread of COVID within the elderly population.
The availability of effective vaccines has given Brookdale stock a much-needed bump. It is now moving steadily upward, and it has nearly returned to pre-pandemic prices.
Analysts expect that growth to continue in coming months as families go back to work and the threat of COVID is finally extinguished.
Mednax
Mednax National Medical Group (MD) offers specialized care for a specific population: women and children.
The organization started out as a neonatal physician’s group, and it has since expanded into prenatal, neonatal, and pediatric care.
Through its subsidiaries, it works with healthcare partners nationwide to provide best-in-class care within existing hospitals, clinics, and medical practices.
In addition, it has a growing telehealth platform to ensure continuous care for women experiencing high-risk pregnancies and medically fragile infants. The telehealth platform gives practitioners and patients access to world-class experts in all matters of maternal, infant, and child health.
Mednax stock has recovered to pre-pandemic levels after dropping sharply during the March 2020 market crash. However, the company is still feeling the impact of a decline in birth rates over the past 12 months.
Neither management nor analysts are ready to give financial guidance for 2021, but industry-wide, the sense is that birth rates will recover and perhaps grow in the coming 12 to 24 months.
Best Hospital Stocks To Buy: The Bottom Line
The bottom line is that healthcare is a smart bet for any portfolio designed with a buy-and-hold strategy. The need for medical services is growing each year, and spending on medical care is increasing faster than inflation.
As a result, healthcare companies with skilled leadership and carefully managed financials are likely to profit over time – and that means shareholders are likely to profit as well.
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