Rising health awareness, an aging population, and an increase in chronic diseases are driving significant growth in the medical industry. Moreover, virtual health services, such as telehealth and telemedicine, should contribute to the medical industry's growth. The global telehealth market is estimated to grow at a CAGR of 23.5% until 2027.
In addition, the Biden administration has invested $110 million to improve rural healthcare facilities. Inclusive healthcare development across the United States is expected to bode well for the medical sector.
Also, as medical stocks are considered recession-proof because of the inelastic demand, we think fundamentally sound and dividend-paying medical stocks Cigna Corporation (CI) and Humana Inc. (HUM) could be ideal buys now amid the widespread fears of an economic downturn.
Cigna Corporation (CI)
CI provides insurance and related products and services in the United States. It operates through two segments, Evernorth and Cigna Healthcare. The company distributes its products and services through insurance brokers and consultants.
On October 28, 2022, CI introduced its quality Health plans for Indiana residents in eight counties, giving more people and communities access to affordable, predictable, and simple healthcare coverage in 2023. These plans are expected to expand CI's customer base.
CI has paid dividends for 33 consecutive years. Over the last three years, CI's dividend payouts have grown at a 382% CAGR. While CI's four-year average dividend yield is 0.60%, its current dividend translates to a 1.35% yield.
CI's total sales came in at $45.28 billion for the third quarter that ended September 30, 2022, up 2.2% year-over-year. Its pharmacy revenues came in at $32.76 billion, up 5.6% year-over-year, while its EPS came in at $8.97, up 86.88% year-over-year.
Analysts expect CI's revenue to increase 5.2% year-over-year to $190.03 billion in 2023. Its EPS is estimated to grow 7.2% year-over-year to $24.83 in 2022. It has surpassed EPS estimates in all four trailing quarters. Over the year, the stock has gained 52.42% to close the last trading session at $331.45.
CI's POWR Ratings reflect this promising outlook. The company has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
CI has a B for Value, Sentiment, and Quality. Within the A-rated Medical - Health Insurance industry, it is ranked #5 among 11 stocks. Click here for the additional POWR Ratings for Momentum, Growth, and Stability for CI.
Humana Inc. (HUM)
HUM and its subsidiaries operate as a health and well-being company in the United States. It operates through three segments: Retail; Group and Specialty; and Healthcare Services.
On November 2, 2022, Bruce D. Broussard, President, and CEO, said, "Humana is well positioned for the 2023 Medicare Advantage Annual Election Period, with plans designed to meet customers' affordability and healthcare needs, especially important given the current economic conditions and knowing many seniors are on fixed incomes."
HUM has paid dividends for nine consecutive years. Over the last three years, HUM's dividend payouts have grown at a 12.5% CAGR. While HUM's four-year average dividend yield is 0.65%, its current dividend translates to a 0.62% yield.
HUM's total revenues came in at $22.80 billion for the third quarter that ended September 30, 2022, up 10.2% year-over-year. Its premium revenue came in at $21.47 billion, up 8% year-over-year. Moreover, its income from operations came in at $1.17 billion, up 86.6% year-over-year.
HUM's revenue is expected to increase 11.5% year-over-year to $93.01 billion in 2022. Its EPS is estimated to grow 21.4% year-over-year to $25.06 in 2022. It surpassed EPS estimates in all four trailing quarters. Over the past six months, the stock has gained 17.4% to close the last trading session at $508.44.
HUM's overall A rating equates to a Buy in our POWR Ratings system. It has a B grade for Growth, Value, and Sentiment. It is ranked #3 in the same industry. Click here for the additional POWR Ratings for Stability, Momentum, Value, and Quality for HUM.
CI shares were trading at $322.92 per share on Friday morning, down $8.53 (-2.57%). Year-to-date, CI has gained 42.95%, versus a -18.47% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
2 Medical Stocks to Buy Now Without Hesitation StockNews.com
