When inflation became a reality in the aftermath of the pandemic in late 2021, analysts argued that it would be transitory. However, over the past months, inflation has become persistent, hitting 7.1% in November 2022. The consumer price index has constantly surged at the fastest rate since the Great Recession, hitting 8.5% in July 2022 from 0.8% in May 2021.
Surprisingly, while consumers and other industries continue to feel the pinch of inflation, the healthcare sector has been significantly resilient to the changes. Since the demand for healthcare is non-discretionary, the industry's anti-inflationary nature makes it one of the best investment options with relatively consistent performance that can earn you substantial inflation-adjusted returns.
You shouldn't be surprised that healthcare stands out in hedging inflation. The demand and the pricing power of healthcare are relatively immune from inflationary pressure. In addition, contracts between healthcare organizations and insurance companies last for three years. This implies that the contract will take relatively the same period to be renegotiated.
In addition, healthcare organizations pass the increasing cost of resources to insurance companies. In response, payers pass the cost to employers and consumers, cushioning the healthcare sector from recession.
As inflation takes a toll on other industries, investing in healthcare now is a good decision. Firstly, demand for health care remains constant or increases during economic downtimes — you're not likely to avoid medical care due to rising inflation.
Secondly, healthcare's unique nature has portrayed its resilience to financial pressure. For instance, the national health expenditure has increased by around 4% annually since 2016, and the federal government projects a steady increase of 4.9% annually in 2021-2028. In addition, while the overall CPI surged by 8.5% in the past year, medical care expenditure rose by just 4.8% in the same period.
While investing in many industries during inflation risks losing your finances, healthcare investing during economic downtimes shows constant profit trends for major investment companies, including the three detailed below. Another stock to take notice of, KALA Pharmaceuticals, doubled our community members return on investment. 2023 could be a great year for the right Healthcare investments.
MCK is one of the top three pharmaceutical distributors in the U.S., according to Deloitte's 2019 report. The company — with a market capitalization of $53.3 billion — is a healthcare service and information technology corporation.
MCK anticipates earning growth of 10.1% in the next five years. The company surpassed earnings estimates in three of the trailing four quarters and missed only once, with the average missed being 13%. In addition, the company's earnings are 7.1% against the overall industry's 4.7%.
UNH is the largest single entity in the health insurance space on market capitalization in the U.S. The company's footprints in healthcare range from health technology, health insurance, and virtual care to data management.
The company is a good investment option — the balance sheet has shown great anti-inflationary qualities during economic downtimes. For instance, as companies across industries saw their balance sheet weaken amidst current inflation, UNH recorded revenue growth of 13%, from $71.3 billion to $80.3 billion in the past year. In addition, the company's operational revenues recorded a 19% growth in the same period.
ABT is a medical device company dealing in enteral nutrition products, medical diagnostic test kits, and generic medicine.
Investing with ABT promises higher returns in the current economic tension. For instance, the company stock in 2022 increased by 60%, a record increase from 2018. In addition, the company's revenue grew by 46% to $44.5 billion over the past year.
Whether you're a beginner investor or looking for expert guidance on your retirement investment during economic downturns, you must use reliable expert information to avoid risking your finances. Brown Investors are experts in bridging the financial literacy gap through education and investment resources to begin a cycle of generational wealth.
If you've invested in our
Long Term Playbook, you would know that Abbott has been one of the highest compounding growth companies that is part of the S&P 500. To be in the know about stocks like these,
join our membership and don't miss out on another investment like this!