With May in the rear-view mirror, investors are looking ahead to the summer after a hectic spring. At the beginning of the season, the TSX index was rife with discounts. That is not the case in the current environment. Today, I want to look at stocks that are perfect for stashing in a TFSA. I’m still incredibly bullish on healthcare stocks. Let’s explore why.
Healthcare stocks are perfect for a TFSA
In the 2010s, technology and healthcare were the stars of the North American markets. The COVID-19 pandemic has highlighted the need for more investment in this sector across the world. Moreover, demographic shifts in developed countries will see demand increase in this industry. Below are a few healthcare stocks worth stashing in your TFSA before the summer.
Biotherapeutics are one of the fastest-growing sub-sectors in healthcare. A 2017 report from Grand View Research projected that the global biotechnology market would reach US$727 billion by 2025. That would represent a CAGR of 7.4% from the beginning of the forecast period. Cancer therapeutics and biotherapeutics are seeing massive investment, and this should continue to grow this decade. In early 2019, I’d recommended the Vancouver-based biotech stock Zymeworks. The company has since migrated solely to the NYSE, but it rewarded Canadian investors handsomely during its run.
Two therapeutics stocks to hold this decade
HLS Therapeutics is a specialty pharmaceutical company. It acquires and commercializes pharma products in the specialty central nervous system and cardiovascular markets in Canada, the U.S., and Barbados. Shares of HLS Therapeutics have climbed 10% over the past month as of early afternoon trading on June 3.
The company released its first-quarter 2020 results on May 7. Revenue rose to $13.9 million over $13.2 million in the prior year. HLS also reported positive adjusted EBITDA and cash from operations. This healthcare stock also offers a modest quarterly dividend payout of $0.05 per share.
In early March, I’d suggested that Knight Therapeutics (TSX:GUD) was a great addition as the market sell-off worsened. Shares of Knight have climbed 14% over the past three months. On May 29, Knight announced that it expects to release its first-quarter 2020 results on June 26, 2020.
Knight made a big splash in 2019 with its acquisition of the Latin American pharma company Grupo Biotoscana. This has provided the company with a greater worldwide reach. The company has put together a nice streak of record revenues, and this recent acquisition has the potential to extend it further into this decade.
This is a healthcare stock I’m still bullish on in June. Shares last had a favourable price-to-book value of 1.2. Knight has high growth potential going forward.
Bet on health technology this decade
WELL Health Technologies owns and operates a portfolio of primary healthcare facilities. Its shares have shot up 82% in 2020 so far. In the first quarter, WELL achieved record quarterly revenue of $10.2 million — up 38% from the prior year. Its digital services revenue soared 918% year over year to $1.7 million. WELL has offered crucial services during the COVID-19 pandemic, allowing healthcare workers to assist through its telehealth program. This is a stock that has explosive potential going forward.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Ambrose O'Callaghan owns shares of ZYMEWORKS INC.