When you think about investing to powerfully grow your money into the future, what giant long-term trends come to mind first?
Certainly anything on the cutting edge of technology does - from mobile, the cloud, and AI to robotics, alternative energy, and autonomous cars.
But do you know what sector is bigger than technology and has trounced it by over 2 times since the start of 1999?
Healthcare. And it offers just as much innovation, if not more -- with more diversification. If you are investing for the future, you need exposure to the healthcare sector to grow truly life-changing wealth.
But what about the dismantling of Obamacare and all the Washington saber-rattling over drug prices? Don't these make the sector "un-investable?"
To the contrary, any policy moves offer only more opportunity in the 800+ companies and 12 industries to choose from. And bigger picture, healthcare profits are still being driven by four big forces that won't stop for another decade at least.
The 4 Megatrend Drivers of Healthcare Profits
1) Boomer Power: An aging population living longer means more care is needed into the "active 90s!"
The demographic trends are clear: US and global populations are aging, as the Millennial baby boom may not be rivaled any time soon.
Plus, people are living longer on average just because of improving economic standards, the quality of food, water, and medical care, and an awareness of health dangers like smoking and excess sugar.
This adds up to a big increase in the number of people living into their 90's. And that means more innovative care will be needed from several medical industries, including pharmaceuticals, cardiovascular technologies, neurological treatments, hospital equipment and instruments, biotechnology, and cancer research discoveries.
Continued . . .
Big Recent Gains from Healthcare Stocks
New treatments are pouring off the pipeline. The needs of an aging population are rapidly increasing. Insurance companies are demanding alternatives to costly procedures.
Already this year, medical megatrends like these have led Zacks to wins of +155.6%, +119.1%, +75.6%, and +98.1% in as little as 5 weeks.
Moving forward, which stocks have similar breakout potential in the months ahead?
See Zacks' latest picks >>
2) Science Power: The breakthroughs in genetics and technology are creating new life-saving and life-enhancing companies as I write.
The age of genetics has ushered in unprecedented advances in scientific and medical research. We have gone from understanding and battling disease with scalpels and poisonous chemotherapies to treating cancer with targeted genetic breakthroughs and vaccines created from one's own immune system.
I've already booked gains of 155% on one gene editing company and I have several more on my radar that could do the same. I even took two double-digit winners of 70% (August 2017) and 98% (January 2018) out of the same immuno-oncology stock before it was acquired by a BioPharma giant, hungry for new science.
My current focus is on the CRISPR companies and their revolutionary breakthroughs in gene editing. But these are tricky investments since they haven't even begun human clinical trials and a commercially viable product is years away.
Their stock prices have run ahead of "forecastable success" and you have to be very careful about which ones you pick and where you buy them.
3) Earnings Power: The follow-on from all this R&D are new products and solutions creating new channels of sales and profits.
In 2016, the healthcare sector was responsible for nearly 20% of the earnings in the S&P 500, bigger than the financial, energy, and telecom sectors combined. And the strength of this profit engine is only enhanced by its diversity across hundreds of companies and a dozen space-age industries.
The beauty of this wealth of investing opportunities is that when one area is out of favor due to political or regulatory headwinds, there are always three or four other industries creating dynamic sales and profit growth.
4) M&A Power: The big Pharma companies need to keep their pipelines full and avoid the revenue drops created by "patent cliffs."
During this bull market, over $500 billion in deals have been done, mostly by big drug companies buying emerging biotech plays for 50-100% takeout premiums.
One of my favorite biotech investments of the past few years was a company called Medivation, which got snatched up by Pfizer for $14 billion in 2016 - but not before a bidding war was fought by some of the biggest names in pharma, forcing the acquirer to pay top dollar. In 2017, the "big deal" was Gilead Sciences paying $12 billion for Kite Pharma.
As I mentioned in Megatrend #2, "Science Power," one of my immuno-oncology plays was bought out this year for nearly a 100% premium. But I already have my sights set on another next-generation cancer-fighter that could fetch at least 50% from its current discount today as it trades 25% off its highs.
While the pace of M&A may slow down from the frenzy we've seen the past few years, it will always be a positive force driving values in the sector. And it just got a turbo-charged boost from Congress as tax reform policy unleashes a tidal wave of overseas corporate cash onto US shores.
The Power of Vision
Profits are sometimes made on fads that don't last. But true wealth is achieved by knowing and following the long-term drivers common to every society.
Healthcare growth globally is unstoppable, just as modern diets of excess sugar and carbs create soaring statistics of cancer, diabetes, and cardiovascular disease.
These 4 megatrends don't look like they will stop in this decade. And probably not in the next one either! So, make sure you have a long-term investing plan to capitalize on them.
I know I'll be looking for the next Intuitive Surgical (ISRG - Free Report) , which sits near record highs above $400 and handed early investors returns of over 5,000% since June of 2000.
If you'd like to target returns like these, I invite you to join me inside Zacks' investment portfolio, Healthcare Innovators.
The confluence of the 4 megatrends above are setting up what is arguably today's most exciting investment opportunity. Healthcare Innovators is designed to help investors take full advantage of these forces.
Already in 2018, healthcare megatrends have led us to wins of +155.6%, +119.1%, +75.6%, and +98.1% in as little as 5 weeks.
Now, picking the best stocks in this sector requires a considerable amount of research. But you don't have to follow FDA filings or subscribe to medical journals. That's my job! Healthcare Innovators enables you to piggy-back on my research, and we'll go after exceptional longer-term gains together.
Plus, if you check out Healthcare Innovators before midnight on Sunday, April 8, you'll get access to Zacks' special report, Making Money on Marijuana. It includes 6 ways to cash in on medical marijuana sales which are expected to nearly triple by 2020, surpassing $13 billion in revenue.
Look into Healthcare Innovators right now >>
Kevin, Senior Stock Strategist at Zacks, is a leading expert in biotech and medical stocks. He provides commentary and recommendations for Zacks' investment portfolio, Healthcare Innovators.