While the healthcare industry may not seem at first glance like the most exciting place to invest your cash, it has proven to be one of the most resilient sectors for investing. It’s not hard to understand why. Healthcare companies tend to supply the products and services that consumers need no matter what is happening with the market or the economy.
If you are looking to add cash to more fantastic healthcare stocks in the month of January, here are two no-brainer buys that can enrich your portfolio over the long term.
1. Vertex Pharmaceuticals
Unlike some healthcare stocks, Vertex Pharmaceuticals (VRTX 1.95%) doesn’t operate in an environment with tremendous competition. Its early presence within the burgeoning cystic fibrosis therapeutics treatment market has enabled it to maintain control of the vast share of this fast-growing multibillion-dollar space while generating steady revenue and profits.
The company currently has four products on the market, all of which treat cystic fibrosis. These products belong to class of drugs called CFTR modulators, which are intended to help manage the underlying genetic catalysts for the disease. Right now, the only company with CFTR modulators on the market is Vertex.
The company’s most profitable drug is Trikafta, which is approved to treat patients as young as 6 years of age who have the genetic disease. There are no worries about a looming patent cliff for this blockbuster drug as patent exclusivity on it is expected to last until 2037.
Vertex’s four products brought in combined revenue of nearly $8 billion in 2021 alone as well as net income of $2.3 billion. Meanwhile, the company is working on a slate of other drugs targeting various rare maladies, from sickle cell disease to acute pain, each of which represents a market that management estimates is a multibillion-dollar addressable opportunity.
The Boston-based drugmaker has a lot going for it: a consistent history of profitability; a strong foothold on the global cystic fibrosis treatment space, which still features many markets yet untapped outside of North America and Europe; and its impressive collection of drug candidates in other disease areas. In short, this looks like a stock with plenty of room left to run in the next decade and well beyond any bear market environment.
2. Johnson & Johnson
Johnson & Johnson (JNJ -0.24%) isn’t a new name to healthcare investors. With a history that goes back nearly 140 years, this is a company that has ridden out more than a few market and economic storms in its time. And Johnson & Johnson has remained a mainstay in households and for patients across the world with its vast portfolio of consumer health products, pharmaceuticals, and medical devices.
The company boasts top-selling products ranging from household names like Neutrogena, Listerine, and Aveeno to blockbuster immunology drugs like Tremfya and Stelara. It recently boosted its fast-growing medical device business with the acquisition of Abiomed, known for the world’s smallest heart pump.
This year, Johnson & Johnson plans to spin its consumer health business off from its pharmaceutical and medical devices businesses into a new company called Kenvue. This could lead to higher growth for Johnson & Johnson. In the third quarter of 2022, the consumer health segment’s operating sales grew just 5% while the pharmaceutical and medical device segments rose 9%, and 8%, respectively.
Overall, J&J reported total net sales of $23.8 billion in the third quarter, up about 2% from the prior-year period, and net earnings of $4.5 billion, up 22%.
Johnson & Johnson boasts an impressive dividend history. The company has raised its dividend every single year for 61 years and has seen its dividend rise by roughly 90% over the trailing decade alone. The stock currently yields 2.5%. After the upcoming spinoff, both companies will continue to pay out dividends.
Investors can decide whether one or both businesses remain more in tune with the composition and growth goals for their personal portfolios. The consumer health business is likely to follow a more moderate pace of growth than the pharmaceutical/medical device company, as it has in the past.
However, the consistent demand for the products of both companies, which remain essential for consumers around the world, can fuel steady growth and returns for both in the years ahead.
Rachel Warren has positions in Johnson & Johnson. The Motley Fool has positions in and recommends Vertex Pharmaceuticals. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.