We recently published a list of the 8 most promising healthcare stocks by hedge funds. In this article, we'll take a look at how Johnson & Johnson (NYSE:JNJ) stands compared to the other most promising healthcare stocks, according to hedge funds.
The healthcare sector relies on advances in medical technology, particularly devices used to prevent, diagnose, and treat diseases. Unlike pharmaceuticals, medical devices work through physical or mechanical means rather than chemical processes. Major products include pacemakers, imaging devices, dialysis machines, and implants.
The healthcare sector is growing in the United States. According to recent estimates, the country's health spending will increase by 7.5% in 2023, outpacing the same year's nominal GDP growth rate. A record 93.1% of Americans now have health insurance, which fueled a surge in health spending last year. The country's national health spending is expected to increase by an average of 5.6% from 2023 to 2032, faster than the projected GDP growth rate of 4.3%.
Moreover, this industry is rapidly growing on a global scale. Healthcare profits are expected to grow at a compound annual growth rate (CAGR) of 7%, from $583 billion in 2022 to more than $800 billion by 2027, according to a recent McKinsey forecast. Although labor shortages and rising inflation continued to weigh on business in 2023, 2024 is expected to be a year of recovery due to a favorable risk-reward environment in the sector. According to the American investment firm, the events of 2023 have created an attractive opportunity for investors to participate in the healthcare industry.
Investment in artificial intelligence (AI) in healthcare has also increased dramatically in recent years, growing twice as fast as IT, according to a study released this month by Silicon Valley Bank. According to the report, companies using AI account for one in every four dollars spent in the healthcare industry. Silicon Valley Bank predicts that more than $11 billion will be spent on the AI healthcare industry this year, with $2.8 billion already invested in 2024.
Investor confidence in the healthcare industry remains high, according to Deloitte's 2024 Global Healthcare Sector Outlook. The industry received $31.5 billion in funding from private equity between 2019 and 2022. The U.S. healthcare sector could save nearly $360 billion over the next five years, thanks to a large number of companies integrating artificial intelligence into their operations. In the near future, AI will likely have a significant impact on healthcare management, diagnosis, treatment, and patient care. Predictive analytics and medical record automation are expected to further improve the effectiveness of healthcare providers and their services.
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In recent months, rising economic uncertainty has prompted a shift toward more defensive stocks, with healthcare emerging as a major beneficiary. The broader market's healthcare sector is up more than 3.6%, with a return of more than 11% over the past year. With this in mind, we take a look at some of the most promising stocks in the healthcare sector.
Our methodology selects the most heavily weighted stocks from the iShares Global Healthcare ETF and ranks them based on the total number of hedge fund holders as of Q3 2024 as tracked in the Insider Monkey database. Ranked.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
Hedge funds bet big on Johnson & Johnson (JNJ): Healthcare stocks to watch
A smiling baby with baby care products lined up in the foreground.
Number of hedge fund holders: 81
Johnson & Johnson (NYSE:JNJ) is a global healthcare giant that operates in three main segments: pharmaceuticals, medical devices, and consumer health products. The company develops and manufactures a wide range of products, from everyday items like Band-Aids and Tylenol to advanced medical devices and innovative prescription drugs.
Regulatory approval for RYBREVANT and TREMFYA was obtained by Johnson & Johnson (NYSE:JNJ). The company strengthened its position in interventional cardiovascular and medical technology with the acquisition of Shockwave Medical in April. From 2025 to 2030, all segments are expected to grow at a compound annual growth rate of 5-7%. In addition, there are approximately 10 assets in the Innovative Medicine sector, each with potential operating revenue in excess of $5 billion.
Johnson & Johnson (NYSE:JNJ) is a dividend-paying company that has increased its dividend for over 60 consecutive years. The company offers a quarterly dividend of $1.24 per share for a dividend yield of over 3%.
As of Q3 2024, 81 hedge funds tracked by Insider Monkey own shares in Johnson & Johnson (NYSE:JNJ), with Fisher Asset Management holding over $1.2 billion It is the largest shareholder with shares of .
Overall, JNJ ranks 4th on the list of most promising healthcare stocks according to hedge funds. While we see the potential in healthcare companies, we believe AI stocks have a better chance of delivering higher returns faster. If you're looking for AI stocks that are more promising than JNJ but are trading at less than 5x P/E, check out our report on the cheapest AI stocks.
Read next: 8 Best Widemot Stocks to Buy Now and 30 Most Important AI Stocks, According to BlackRock
Disclosure: None. This article was originally published on Insider Monkey.
