The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( Insider Monkey) -- Health care is a fast-growing industry in the U.S. Healthcare spending is rising at about 8% per year, with a typical American family of four spent about $18,000 on medical costs in 2010, compared with $16,771 in 2009. Between 2006 and 2010, annual medical costs increased by almost 35%. Rising healthcare costs are not good for the patients, but those who invest in healthcare stocks will benefit from such growth. As healthcare spending and costs are rising, we believe healthcare stocks will continue to be in the portfolios of most smart investors in the future. Below we compiled a list of 10 of the most profitable health care companies based in U.S. All companies have at least $10 billion market cap, operating margin of over 20%, and EPS growth rate of more than 10% over the past five years.
Alexion Pharmaceuticals ( ALXN) is the fastest-growing stock on the list above. Its EPS grew at 87.72% on average annually during the past five years. It also has a high operating margin of 28.16%. Alexion is engaged in discovering, developing and commercializing therapeutic products aimed at treating patients with severe and life-threatening diseases. Its total revenue increased from only $1.56 million in 2006 to $541 million in 2010. ALXN was held by 20 hedge funds at the end of the third quarter. Andreas Halvorsen's Viking Global also bought $46 million worth of new ALXN shares during the third quarter.
Jim Simons' Renaissance Technologies had $23.4 million invested in ALXN at the end of September. We like healthcare stocks. Healthcare is still growing faster than the rest of the economy and National Health Expenditures (NHE) as a share of GDP is expected to reach 19.6% by 2019. We think health care is a promising sector and we encourage investors to do some in-depth research on the profitable healthcare stocks for their portfolios. >>To see these stocks in action, visit the 10 Health Care Stocks to Watch portfolio on Stockpickr.