This year marked the beginning of the so-called "baby-boomer" generation reaching the current 65-year old retirement age. This, of course, is the population boom occurring after the conclusion of World War II from 1946-1964 where an estimated 77 million were born in the United States alone.
So, with this aging generation comprising a big portion of the economy and even bigger financial pie as they have accumulated plenty of earnings throughout the decades, health-related stocks look compelling as they should see profits rise. Moreover, these ones below operate primarily in sectors of the healthcare industry that benefit from the aging population by working on heart and brain-related products that significantly rise in demand as people get older.
Medtronic (NYSE:MDT) manufactures and sells device-based medical therapies worldwide. It provides implantable cardioverter-defibrillators, cardiac resynchronization therapy devices and cardiac pacemakers for the diagnosis, treatment and management of heart rhythm disorders and heart failure. MDT trades at a premium against peers, but for good reason as they have executed beautifully. Moreover, it still trades at a reasonable 11x trailing P/E, 10x forward P/E, fantastic ROA and ROE of 9% and 21% respectively, very strong $3.2B in FCF this past year, and consistently growing 2.7% dividend yield.
Boston Scientific (NYSE:BSX) develops, manufactures and markets medical devices used in various interventional medical specialties worldwide. We recently brought up some nice bullish activity in BSX here. I see some attractive valuations at a trailing 15x P/E, 11x forward P/E, .7x P/B, 1x P/S, and 6.5x EV/EBITDA. It is worth noting as a bearish case that the balance sheet has a massive $16.5B in goodwill and intangible assets combined, which when stripped out, gives BSX actually an approximate negative $3.5/share in book value. However, BSX looks to have stabilized and this insider buying is encouraging, which gives me the nod in making this a speculative value buy.
St. Jude Medical (NYSE:STJ) develops, manufactures and distributes cardiovascular and implantable neurostimulation medical devices worldwide. It operates in four segments: Cardiac Rhythm Management, Cardiovascular, Atrial Fibrillation and Neuromodulation. This well-run company is showing some nice value at just a trailing 13x P/E, 10x forward P/E, 1x PEG, nice FCF of approximately $1B this past year, and a consistent 2.3 dividend yield.
Baxter International (NYSE:BAX), through its subsidiaries, develops, manufactures and markets products for people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma and other chronic and acute medical conditions. This well-run company has some attractive valuations at a 13x trailing P/E, 11x forward P/E, 1.1x PEG, fantastic ROA and ROE of 11% and 32%, respectively, and a consistently growing 2.6% dividend yield.
United Health Group (NYSE:UNH) is the largest HMO in the world, near $100B in annual revenue, and a company we've brought up before as shown here. The stock looks favorably priced at just a 10x trailing and forward P/E, .5x EV/S and P/S, 1.3% dividend yield, and approximately $5.5B in FCF this past year. Moreover, the payout ratio is extremely low at 13%, so expect continued dividend hikes.
Covidien Public Limited Company (COV) develops, manufactures and sells healthcare products for use in clinical and home settings in the United States and internationally. This Irish-based firm offers nice international exposure at an attractive 12x trailing P/E, 10x forward P/E, 1x PEG, over $1.5B in FCF this past year, and a consistently growing 2% dividend yield.
Thermo Fisher Scientific (NYSE:TMO) provides analytical instruments, equipment, reagents and consumables, software, and services for research, manufacture, analysis, discovery, and diagnostics. The company looks attractively priced at a trailing 14x P/E, 10x forward P/E, .9x PEG, 1.1x P/B, and approximately $1.2B in FCF this past year.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.