Investors looking for growth and income should look at healthcare stocks. This sector has experienced a stabilization of profits over the past year. The healthcare sector had an EPS growth last quarter of 27% compared to a year ago quarter. The aging demographics are a positive, as healthcare usage increases with age. This results in an increase in spending for healthcare services and pharmaceuticals. There is uncertainty related to healthcare reform and deficient reduction. The patent expiration of blockbuster drugs is likely to increase merger and acquisition activity. The healthcare sector had dividend growth of 43% last year versus a year earlier. There are several stocks that are looking very bullish for growth and income in the coming years. Here is a list of healthcare stocks worth further evaluation:
UnitedHealth Group Incorporated (NYSE:UNH) operates as a diversified health and well-being company in the United States. UNH has been executing well in a weak economic environment, and we expect it to continue to do so. Looking ahead, we see continued membership gains, assuming attractive commercial products, a rising Medicare population, and the increasing transition of Medicaid beneficiaries into managed care. UNH is trading at $55.48 with a 1.2% dividend yield. UNH will have a yield on cost of 7.2% in 10 years. It has an equity summary score of 10 on a 10 point scale, which is a very bullish analyst's consensus rating. UNH is currently trading at a 7% premium to fair value, and is a buy up to $52.00.
Amgen Inc. (NASDAQ:AMGN), a biotechnology medicines company, discovers, develops, manufactures and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses primarily in the United States, Europe, and Canada. Our recommendation reflects our view that the market rollout of Denosumab for postmenopausal osteoporosis (as Prolia) and cancer uses (as XGEVA) is likely to shift investor focus to AMGN's long-term pipeline. However, we see legacy drug cash flows supporting dividends, share repurchases and R&D investments and acquisitions, such as the acquisition of cancer drug developer Micromet, which was recently closed. AMGN is trading at $68.01 with a 2.1% dividend yield. It has an equity summary score of 9.9 on a 10 point scale, which is a very bullish analyst's consensus rating. AMGN is currently trading at a 4.5% premium to fair value and is a buy up to $65.00.
Abbott Laboratories (NYSE:ABT) engages in the discovery, development, manufacture and sale of healthcare products worldwide. In mid-October 2011, ABT announced a planned split-up of the company, to be accomplished through the spinoff to shareholders of the research-based pharmaceuticals business (estimated sales of $18 billion) as a separate concern. Abbott will retain its legacy medical products operations (sales of $22 billion), comprising diagnostics, devices, nutritionals and generic drug operations. We believe this move will result in higher valuations for each company, with investors better able to focus and appreciate the respective growth potential of each firm. We expect the planned tax-free spinoff, subject to customary approvals, to be completed by the end of 2012. ABT is trading at $57.95, with a 3.5% dividend yield. ABT will have a yield on cost of 10.5% in 10 years. It has an equity summary score of 9.8 on a 10 point scale, which is a very bullish analyst's consensus rating. ABT is currently trading at an 18% discount to fair value.
Aetna Inc. (NYSE:AET) operates as a diversified health care benefits company in the United States. AET operates in three segments: Healthcare, Group Insurance and Large Case Pensions. AET has the scale, diversity, innovative health information technology and healthy cash flow to perform better than most insurers amid healthcare reform. We view positively its cost control initiatives and increasing diversification, including international expansion and penetration of the growing Medicaid market, which we view as poised to grow markedly in 2014 based on the healthcare reform law. Meanwhile, looking at 2012 and beyond, we think enrollment is poised to grow faster than its large peers. The company has been building narrow provider networks and increasing the number of risk-sharing arrangements with providers, called accountable care solutions, where it has high local market shares. AET is trading at $46.86 with a 1.5% dividend yield. AET will have a yield on cost of 6.0% in 10 years. It has an equity summary score of 9.8 on a 10 point scale, which is a very bullish analyst's consensus rating. AET is currently trading at a 16.5% discount to fair value.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.