Growth stocks are shares in an organisation that an investor expects will increase in value at a rate that’s higher than the average growth of the market. Alongside value investing, growth investing is one of the two main investing strategies that investors employ.
The healthcare sector is a popular area of investment for growth stock investors to seek targets. Some well-known healthcare growth stocks include AstraZeneca (NASDAQ: AZN), Pfizer (NYSE: PFE), AbbVie (NYSE: ABBV), and Teladoc Health (NYSE: TDOC).
What is the healthcare sector?
Connecting doctors with patients remotely is big business, and telehealth is set for considerable growth. Personalized healthcare experiences are in demand. And digital health tracking via apps and wearable devices is also soaring.
Foremost, improved care is desperately needed all over the world.
Therefore, the healthcare sector no longer refers to drug companies, medical device manufacturers, and health insurance providers.
Cloud technologies, remote-work platforms, shared services, and AI all offer potential solutions in healthcare too.
Therefore, the healthcare sector covers an array of projects and possibilities. In fact, the healthcare sector is the second-largest investing sector in the S&P 500 after technology.
Q3 2021 healthcare growth stocks by EPS
EPS stands for earnings per share. This is a financial investing ratio. It relates the earnings generated by the company to the number of shares in issue. EPS is measured as a percentage change over a given period.
A high EPS growth rate is attractive to investors because it will potentially provide outsized returns.
So, the best healthcare growth stocks sorted by EPS today include the following:
The Ensign Group
The Ensign Group provides skilled nursing and assisted living services, physical, occupational and speech therapies, and other rehabilitative and healthcare services throughout the United States.
And it has strong financial metrics. Ensign’s three-year compound annual growth rate (CAGR) of EPS is 78%. While revenue has been increasing at 12.4% CAGR.
ENSG stock appears in 93 exchange-traded funds (ETFs). It has a price-to-earnings ratio (P/E) of 27, and its dividend yield is 0.24%. Ensign has been paying a dividend since 2002. The analysts 12-Month average share price target is $98.20.
Fortune 500 healthcare star PerkinElmer provides detection, imaging, and analytical technologies in life sciences research as well as diagnostics instruments and software to detect genetic disorders and infectious diseases.
PerkinElmer’s three-year compound annual growth rate (CAGR) of EPS is 39.59%. While revenue has been increasing at 12.4% CAGR.
The PKI share price has risen 49% in a year and 177% in 5 years. The PKI stock also appears in 176 ETFs, it has a P/E of 16, and its dividend yield is 0.18%. The analysts 12-Month average share price target is $155.71.
Q3 2021 healthcare growth stocks by sales growth
Sales growth is an essential investing metric for investors to track. If sales are increasing, it indicates the business is doing well. But if sales are declining, the company may be in trouble.
To calculate the sales growth rate year over year, divide the current sales by the prior year’s sales.Sales growth = this year’s sales / last year’s sales
The best healthcare growth stocks, sorted by sales growth today, include the following:
Inmode is an Israeli company manufacturing surgical instruments and medical treatments. Its target market includes plastic and aesthetic surgeons and dermatologists.
It has a P/E of 41, and INMD stock appears in 20 ETFs, but it doesn’t offer a dividend.
Inmode’s sales growth for its latest interim period vs. the prior period is 62%. Meanwhile, its three-year CAGR for Sales is 56% and analysts 12-Month average share price target is $97.
See above in EPS Growth.
Q3 2021 healthcare growth stocks by NAV
Net asset value, or NAV, equates to the value of a business or fund’s total assets minus its liabilities. The NAV is commonly used to measure the value of all the equity holdings in an exchange-traded fund (ETF), investment trust, or mutual fund.
Some speculative healthcare growth stocks, sorted by NAV, include the following:
The Joint Chiropractic company owns, franchises, and operates chiropractic clinics throughout the United States.
It has a P/E of 85, and it doesn’t offer a dividend. The JYNT share price is up 504% in a year and 3,552% in the past five years. JYNT stock is held in 59 ETFs.
Analysts 12-Month average share price target is $72.20. This is 15% below its current share price. Nevertheless, the consensus remains a buy.
Select Medical Holdings Corp.
Select Medical Holdings runs specialty hospitals, outpatient rehabilitation clinics, and occupational medicine centers throughout the US. Founded in 1996, Select Medical continues to expand through M&A.
The SEM share price has risen 192% in the past year and is up 252% in the past five years. It has a P/E of 17 and offers shareholders a 1.2% dividend yield. The analysts 12-Month average share price target is $46.
Bio-Rad Laboratories, Inc.
Bio-Rad Laboratories manufactures specialized technological products for the life science research and clinical diagnostics markets. Founded in 1952, Bio-Rad is based in California. Its 2020 revenues exceeded $2.5bn.
BIO stock’s latest interim period vs. prior period of sales growth rose 27%, while EPS growth increased 42%. Bio-Rad has a P/E of 4.9, but its forward P/E is 63.
Analysts 12-Month average share price target is $667.50. This is slightly lower than its current share price.
Owens & Minor, Inc.
Owens & Minor is a global healthcare logistics company. The OMI share price has risen 475% in the past year but only 18% in the past five years. That’s because it had a strong upwards trajectory between 1999 and 2016 but plummeted between 2016 and 2019.
This has a lot to do with its future projections. That’s because Owens & Minor expects to grow its business from $8.5bn in revenue in 2020 to over $12bn by 2026.
Owens & Minor has a P/E ratio of 27 and a dividend yield of 0.023%. A total of 97 ETFs hold OMI stock and analysts 12-Month average share price target is $45.50.
There are many healthcare stocks to choose from, and these growth stocks only provide a snapshot of what’s available.
In our analysis above, both Inmode Ltd (NASDAQ: INMD) and PerkinElmer, Inc. (NYSE: PKI) came out on top. Each is experiencing momentum and revenue growth, but it’s important investors do their own due diligence before buying shares.