ISRG

Got $500? 3 Healthcare Stocks to Buy and Hold Forever

The healthcare industry can be a good place to invest for the long term. Demand for healthcare is only going to rise as the number of seniors goes up, and general population growth will also mean more of a need for devices, drugs, and healthcare services.

Even if you don't have thousands of dollars to invest right now, putting $500 into a growing healthcare business can make for a great long-term investment. If you were to average a 15% compound annual growth rate over a span of 30 years, that $500 would grow to more than $33,000.

Three companies that trade at less than $500 per share today and that look like attractive long-term buys are Intuitive Surgical (NASDAQ: ISRG), Bristol Myers Squibb (NYSE: BMY), and Novo Nordisk (NYSE: NVO).

1. Intuitive Surgical

Robotic-assisted surgery definitely looks to be the future of healthcare. It's already improving patient outcomes, and artificial intelligence (AI) technology could further boost its efficiency and effectiveness. And one company that's already a key player in that space is Intuitive Surgical.

The company recently unveiled the latest iteration of its surgical system, the Da Vinci 5, which Intuitive says is "delivered on a platform built for future AI," noting that it has 10,000 times the computing power of the company's prior-generation system. With greater efficiency and throughput, Intuitive Surgical looks ready to take advantage of advancements in tech which could bolster its long-term outlook.

Last year, its sales grew by 14% to $7.1 billion, while profits rose by 35% to $1.8 billion. The company generates strong margins, and could be an underrated AI opportunity in the healthcare industry.

The one thing that may deter some investors is the stock's high price-to-earnings multiple of 75. But if you're planning to hang onto the positions in your portfolio for decades, then that shouldn't be a big concern given the potential that Intuitive Surgical has to grow its earnings over time.

2. Bristol Myers Squibb

Bristol Myers Squibb looks like another solid investment in healthcare. Its products span many therapeutic areas, including oncology, hematology, immunology, and neuroscience. That broad business makes it an appealing long-term holding given the many ways the company could grow. Currently, Bristol Myers Squibb is developing more than 45 different compounds and studying them as treatments for more than 40 conditions.

The company will soon lose patent exclusivity for some of its key drugs, including Eliquis and Opdivo. But its pursuit of both innovation and acquisitions to bolster its portfolio puts it on track to offset those challenges.

Last year, Bristol Myers' top line declined by 3% to $45 billion and operating income fell by 10% to $8.2 billion. While the company is generating revenue from new products and hopes that they will drive future growth, many investors simply haven't been willing to be patient with the stock.

Investing $500 into Bristol Myers and forgetting about it could be a good move as this is a strong healthcare company with a plan for growth, and it's trading at a discounted level of just 13 times earnings. And with a dividend that at current share prices yields around 5%, investors have an extra incentive to hang on and wait for its growth to pick up again.

3. Novo Nordisk

Novo Nordisk is a fast-growing company that likely won't require as much investor patience. Sales of its diabetes drug Ozempic and its weight-loss treatment Wegovy -- both of them formulations of semaglutide -- have helped the company achieve impressive results over the past few years. The Denmark-based business is investing in more manufacturing capacity for those blockbusters, which should help it alleviate shortages and meet patient demand.

As a top company in the weight loss industry, Novo Nordisk can benefit from a lot more growth as excitement continues to build for glucagon-like peptide 1 (GLP-1) agonists such as Ozempic and Wegovy. Even though Ozempic isn't approved for weight loss, that hasn't stopped patients from using it for that purpose.

In 2023, Novo Nordisk's sales jumped by 31% to 232.3 billion Danish krone ($34.8 billion), and its bottom line soared by 51% to 83.7 billion Danish krone ($12.6 billion). But there's a lot more room for this healthcare company to do even better as it rolls out Wegovy to more markets. Trading at 47 times earnings, this isn't a cheap stock to buy, but Novo Nordisk could still be a good place to invest $500 for the long term.

Should you invest $1,000 in Intuitive Surgical right now?

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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bristol Myers Squibb and Intuitive Surgical. The Motley Fool recommends Novo Nordisk. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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