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The Zacks Medical sector has been relatively strong over the last month, climbing nearly 5% vs. the S&P 500’s ascent of 4%.
Image Source: Zacks Investment Research
Additionally, the sector is currently ranked #2 out of all 16 Zacks sectors, telling us that stocks within have been witnessing favorable earnings estimate revisions.
After all, since a sector is nothing more than a group of stocks in a similar business, utilizing the Zacks Sector Rank is the perfect way to see which areas currently look more promising than others.
For those looking to tap into the relative strength, three top-ranked stocks – Elevance Health (ELV - Free Report) , McKesson Corp. (MCK - Free Report) , and Humana (HUM - Free Report) – could all be considered.
As we can see in the chart below, shares of all three companies have been on a rock-solid run over the last month, easily outperforming the S&P 500.
Image Source: Zacks Investment Research
Let’s take a deeper dive into each one.
McKesson Corp.
McKesson Corp. is a healthcare services and information technology company operating through two segments: Distribution Solutions and Technology Solutions. The company currently sports a Zacks Rank #2 (Buy).
MCK has a strong earnings track record, exceeding the Zacks Consensus EPS Estimate in nine of its last ten quarters. Revenue results have also consistently been better than expected, with MCK chaining together five consecutive top-line beats.
Image Source: Zacks Investment Research
Further, the company rewards its shareholders with a small dividend; MCK’s annual dividend yields 0.6% paired with a sustainable payout ratio sitting at just 8% of earnings.
The company has upped its dividend five times over the last five years, translating to a respectable 7.8% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
McKesson has witnessed favorable growth trends as well – in its latest quarter, revenue from its U.S. Pharmaceutical and Specialty Solutions (80% of net revenues in FY22) came in at $56.9 billion, reflecting a 14% Y/Y uptick and easily beating the Zacks Consensus Estimate of $52.7 billion.
Humana
Humana is a health care plan provider in the United States, providing health insurance benefits under Health Maintenance Organization, Private Fee-For-Service, and Preferred Provider Organization plans.
Humana’s earnings outlook has turned bright over the last several months, helping land the stock into a favorable Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
The company carries a favorable growth profile, with earnings forecasted to climb 21% in its current fiscal year (FY22) and a further 12% in FY23.
The projected earnings growth comes on top of forecasted Y/Y revenue upticks of 12% and 9% in FY22 and FY23, respectively.
Image Source: Zacks Investment Research
Like MCK, Humana pays a small dividend; HUM’s annual dividend yield comes in at 0.6%, visibly lower than its Zacks Medical sector average.
Still, the company’s 23.5% five-year annualized dividend growth rate helps to pick up the slack.
Image Source: Zacks Investment Research
The company’s retail segment (66% of FY21 revenue) raked in $20.9 billion in its latest quarter, good enough for a 13% Y/Y uptick and to beat the Zacks Consensus Estimate of $20.4 billion by 2%.
Elevance Health
Elevance Health Inc. operates as a health benefits company, supporting consumers, families, and communities across the entire care journey to lead healthier lives.
ELV has found success as of late within its earnings releases, exceeding both top and bottom-line estimates in back-to-back quarters. In its latest print, the company registered a 6% EPS beat paired with a 1.3% revenue beat.
Image Source: Zacks Investment Research
Elevance Health is forecasted to grow at a solid pace – earnings are forecasted to climb 11% in its current fiscal year (FY22) and a further 13% in FY23.
Image Source: Zacks Investment Research
ELV’s Government Business segment (roughly 53% of FY21 revenue) grew 15% Y/Y and raked in $23.8 billion in its latest quarter thanks to the rise in Medicaid membership and higher premium rates of Medicare.
Bottom Line
The Zacks Medical sector has been relatively strong over the last month, outperforming the S&P 500 modestly. Currently, it ranks #2 out of all 16 Zacks sectors.
By focusing on companies in a highly-ranked Zacks sector, we can easily find groups of stocks with a brighter near-term earnings outlook than others.
All three stocks above – Elevance Health (ELV - Free Report) , McKesson Corp. (MCK - Free Report) , and Humana (HUM - Free Report) – reside in the sector and carry a favorable Zacks Rank, undoubtedly a rock-solid pairing.
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3 Top-Ranked Medical Stocks Lapping the S&P 500
The Zacks Medical sector has been relatively strong over the last month, climbing nearly 5% vs. the S&P 500’s ascent of 4%.
Image Source: Zacks Investment Research
Additionally, the sector is currently ranked #2 out of all 16 Zacks sectors, telling us that stocks within have been witnessing favorable earnings estimate revisions.
After all, since a sector is nothing more than a group of stocks in a similar business, utilizing the Zacks Sector Rank is the perfect way to see which areas currently look more promising than others.
For those looking to tap into the relative strength, three top-ranked stocks – Elevance Health (ELV - Free Report) , McKesson Corp. (MCK - Free Report) , and Humana (HUM - Free Report) – could all be considered.
As we can see in the chart below, shares of all three companies have been on a rock-solid run over the last month, easily outperforming the S&P 500.
Image Source: Zacks Investment Research
Let’s take a deeper dive into each one.
McKesson Corp.
McKesson Corp. is a healthcare services and information technology company operating through two segments: Distribution Solutions and Technology Solutions. The company currently sports a Zacks Rank #2 (Buy).
MCK has a strong earnings track record, exceeding the Zacks Consensus EPS Estimate in nine of its last ten quarters. Revenue results have also consistently been better than expected, with MCK chaining together five consecutive top-line beats.
Image Source: Zacks Investment Research
Further, the company rewards its shareholders with a small dividend; MCK’s annual dividend yields 0.6% paired with a sustainable payout ratio sitting at just 8% of earnings.
The company has upped its dividend five times over the last five years, translating to a respectable 7.8% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
McKesson has witnessed favorable growth trends as well – in its latest quarter, revenue from its U.S. Pharmaceutical and Specialty Solutions (80% of net revenues in FY22) came in at $56.9 billion, reflecting a 14% Y/Y uptick and easily beating the Zacks Consensus Estimate of $52.7 billion.
Humana
Humana is a health care plan provider in the United States, providing health insurance benefits under Health Maintenance Organization, Private Fee-For-Service, and Preferred Provider Organization plans.
Humana’s earnings outlook has turned bright over the last several months, helping land the stock into a favorable Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
The company carries a favorable growth profile, with earnings forecasted to climb 21% in its current fiscal year (FY22) and a further 12% in FY23.
The projected earnings growth comes on top of forecasted Y/Y revenue upticks of 12% and 9% in FY22 and FY23, respectively.
Image Source: Zacks Investment Research
Like MCK, Humana pays a small dividend; HUM’s annual dividend yield comes in at 0.6%, visibly lower than its Zacks Medical sector average.
Still, the company’s 23.5% five-year annualized dividend growth rate helps to pick up the slack.
Image Source: Zacks Investment Research
The company’s retail segment (66% of FY21 revenue) raked in $20.9 billion in its latest quarter, good enough for a 13% Y/Y uptick and to beat the Zacks Consensus Estimate of $20.4 billion by 2%.
Elevance Health
Elevance Health Inc. operates as a health benefits company, supporting consumers, families, and communities across the entire care journey to lead healthier lives.
ELV has found success as of late within its earnings releases, exceeding both top and bottom-line estimates in back-to-back quarters. In its latest print, the company registered a 6% EPS beat paired with a 1.3% revenue beat.
Image Source: Zacks Investment Research
Elevance Health is forecasted to grow at a solid pace – earnings are forecasted to climb 11% in its current fiscal year (FY22) and a further 13% in FY23.
Image Source: Zacks Investment Research
ELV’s Government Business segment (roughly 53% of FY21 revenue) grew 15% Y/Y and raked in $23.8 billion in its latest quarter thanks to the rise in Medicaid membership and higher premium rates of Medicare.
Bottom Line
The Zacks Medical sector has been relatively strong over the last month, outperforming the S&P 500 modestly. Currently, it ranks #2 out of all 16 Zacks sectors.
By focusing on companies in a highly-ranked Zacks sector, we can easily find groups of stocks with a brighter near-term earnings outlook than others.
All three stocks above – Elevance Health (ELV - Free Report) , McKesson Corp. (MCK - Free Report) , and Humana (HUM - Free Report) – reside in the sector and carry a favorable Zacks Rank, undoubtedly a rock-solid pairing.