Health care stocks are a wise investment for anyone who wants to add a stable option to their portfolio. The best health care companies are invested in several subsectors in the industry, giving them the opportunity to pursue new technology and advancements while continuing to reliably serve the ongoing needs of the population.
Diversified Holdings Keep You Safe
One of the greatest strengths of good health care stocks is their diversification. The health care industry takes many forms, and a company that’s invested in several parts of the health care industry is poised for great success. Here’s a quick primer on the major subsectors in health care:
- Pharmaceuticals: Prescription drugs that are still under patent provide consistent cash flow for successful companies who’ve scored big with a popular product like Zoloft.
- Medical Devices: Developing countries are creating a growing need for medical devices and technology. As the economy improves, the market for elective surgeries will improve as well. Look for stable players who produce several different products, such as Medtronic Inc.
- Health Care Services: Health care services are a necessity; however, these stocks are expected to fluctuate in the short-term as a result of new health care policies. The long-term outlook is favorable, making this a strong option for diversifying health care stocks.
- Health Care Products: Health care products are a relatively stable investment, as consumers need these items regularly and are unlikely to sacrifice health care staples, even in an economic downturn.
- Biotech: Biotech is the wave of the future. Though these stocks are volatile in the short-term, they’re a great option for shoring up your stock of choice for the future.
- Vaccines: This necessary product can give your health care portfolio the stability that you crave in a stock investment.
Big Players are Experiencing Growth
GlaxoSmithKline experienced 12.82 percent growth over the last year. Their portfolio includes vaccines, health care, and pharmaceuticals, giving it a comfortable amount of diversity. Johnson & Johnson is a name any consumer will immediately recognize. This company has a hand in medical devices, pharmaceuticals, and health care products, with over 275 operating companies. Johnson & Johnson has experienced steady growth with no signs of slowing.
These two big players demonstrate that the health care industry is a smart play for stable investments and steady growth. Investors should keep in mind, however, that much of the strength behind these companies is in their diversity. Always research health care investments before you buy and look for those that are backed by more than a single miracle drug.
An Aging Populous Will Keep Health Care Strong
America’s aging population is experiencing unprecedented growth. According to the CDC, the population of United States will have an estimated 89 million people aged 65 or older by 2050. This is nearly double the number of people in this age bracket as of 2010. The last baby boomer will turn 65 in 2030, by which time approximately one fifth of the country will be older adults.
This dramatic shift in the country’s population will create a steadily growing need for health care products and services. Health care investments are generally considered long-term investments. Over the next few decades, you can expect significant growth from these types of stocks. Serving the growing needs of America’s aging population is a profitable venture with markets for everything from prescription drugs to medical devices.
You Have Several Options
The health care industry has many successful stock options for you to consider. You can easily pick and choose the companies that you feel best about. If you disagree with the practices or products of one provider, you can easily invest your money elsewhere while still enjoying all the benefits of a health care investment. The Street picked Aetna Inc, UnitedHealth Group, and Magellan Health Services Inc as top options for 2014. Pick your own favorites to fill out your portfolio.
If you’re ready to add some health care stocks to your portfolio, start by looking into the products and services that major companies provide. You’ll find several smart choices that will make profitable additions to your own investments.
Mandi Rogier writes regularly on money management and investments. Follow her on Twitter @AMRogier.