The performance of TSX’s healthcare sector in the last six months has been decent (+16.02%), and it continues to outperform the broader market year to date amid the constant spikes and dips. Emerging healthcare trends, including the adoption of artificial intelligence (AI), could boost the sector and healthcare-related businesses.
If you want to invest in the healthcare space this month, WELL Health Technologies (TSX: WELL), Knight Therapeutics (TSX: GUD), and NorthWest Healthcare Properties (TSX: NWH.UN) are the best stocks to buy right now. The companies will be around for some time, regardless of the economic environment.
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Medical care facilities
WELL Health has a solid footprint in the healthcare industry because it is Canada’s largest owner and operator of outpatient health clinics. In addition to the primary healthcare facilities in the U.S. and Canada, the $862.15 million digital health technology company provides EMR (electronic medical record) services to clinics and doctors across the home country.
The current share price of $3.51 (-8.8% year to date) is relatively cheap, although based on market analysts’ 12-month average and high price targets, the upside potential is between 112.3% ($7.45) and 213.4% ($11). AI, with its endless applications for patients and medical professionals, is a growth catalyst.
In October 2023, WELL Health acquired HEALWELL’s performing clinical assets and launched WELL AI to empower healthcare providers with next-generation decision-support systems.
More importantly, the company reported a $776.1 million revenue in 2023, representing a 36% year-over-year increase. Management maintains a robust outlook for 2024 and expects annual revenue from $950 to $970 million.
Positioned for future success
Knight Therapeutics trades slightly higher than WELL ($5.42 per share), but the potential price appreciation is equally enticing. Based on market analysts’ “strong buy” recommendations, GUD could rise by as much as 40% to $7.60 in one year.
This $582.74 million specialty pharmaceutical company focused on acquiring, in-licensing, out-licensing, marketing, and commercializing innovative prescription pharmaceuticals. Knight’s primary goal is to bring branded generic products to Canada and Latin America. As of year-end 2023, it has a robust pipeline of 17 products in 11 countries.
In 2023, revenues increased 12% to $328.2 million versus 2022, while net loss thinned 44% year over year to $16.8 million. Management said Knight Therapeutics is well-positioned for future success due to its unique and profitable platform. The 17 products in the pipeline should be launch-ready by 2028 and deliver over $120 million in peak revenues.
Only REIT in the cure sector
NorthWest Healthcare is the only real estate investment trust (REIT) in the cure sector. This $1.21 billion REIT owns and manages medical office buildings, hospitals, and clinics in eight countries. The tenant base is in the healthcare, research, life sciences, and education sectors.
The REIT is a pure dividend play and ideal for income-focused investors. At $4.99 per share (-1.2% year to date), you can partake in the hefty 7.21% dividend. Management believes the REIT contributes to the highest standard of healthcare by creating and enhancing healthcare infrastructure.
Good investment options
WELL Health, Knight Therapeutics, and NorthWest Healthcare Properties are good investment options. The first two can outsized capital gains, while the third can provide recurring monthly passive-income streams.
