The Best And Most Recommended Healthcare Stocks For 2013

Herbalife (HLF)
Best Yielding Healthcare Stock

Best Healthcare stocks with buy ratings originally published at "long-term-investments.blogspot.com". This month I like to discover the best recommended stocks from all sectors at the capital market. I like to start with the healthcare sector, one of the biggest ones. Here are some facts for our statistical lovers:

The healthcare sector has 540 companies with a health related business model. The total market capitalization of all stocks is 64.5 trillion. Stocks from the healthcare sector have an average P/E ratio of 20.78 and they pay in average a dividend yield of 3.37 percent. The best dividend paying industries are major drug manufactures and Biotechnology companies. Biotech’s are now the second best yielding category with an average industry yield of 2.13 percent.

Below is a small list with some fundamentals about the most recommended higher capitalized stocks from the healthcare sector. I excluded stocks with a market capitalization below USD 2 billion because I think the risk should be much higher as for mid-capitalized stocks.

These are the results: Nine of the 20 best rated stocks pay dividends. Half of the results are large caps and all stocks have positive expected mid-term earnings per share growth. Yes, healthcare is still a growth opportunity.

My Best Healthcare Stock Picks For 2013 | Last Year’s Picks Gained 31.55%

Last year at this time, I made a screen of some stocks from the healthcare sector with an interesting market valuation, a great past growth performance as well as good earnings situation. The stocks had a forward P/E of less than 15, a sales growth over the recent five years of more than 10 percent as well as an operating margin over 10 percent. Exactly seven stocks fulfilled these criteria at that time. Today I like to review these picks and try to discover a new list of potential stocks for next year, 2013. 

Over the recent year the Dow Jones Index is up 8.36 percent, the S&P 500 gained 13.82 percent and the NASDAQ is 14.58 percent higher. My seven healthcare picks from last year performed in average 31.55 percent while the healthcare sector summarized a total gain of 25.7 percent. Below is a current screen of the seven picks with performance figures.

Performance Review Of The Healthcare Picks 2012 (Click to enlarge)

The bad news for me is that I don't have invested in one of them. Now I try to make a similar screen with attractive price ratios. The only new restrictions are simple. I allow lower capitalized stocks (over USD 2 billion market capitalization) and introduce a new barrier in terms of earnings growth. I want mid-term (next five years) earnings per share growth of more than 5 percent. Thirteen companies remain.