Jim Cramer's 12 Best Health Care Stocks to Buy Right Now

NEW YORK (TheStreet) -- Which are the best stocks to buy now if you're worried about economic sensitivity? Health care stocks.

"All of these are in ascension, numbers are too low and their businesses are totally, and I mean totally, recession-proof," according to Jim Cramer, Mad Money star, co-portfolio manager of Action Alerts Plus, a charitable trust portfolio and Real Money columnist. Cramer is referring to a list of 12 health care stocks to buy despite the S&P 500's performance this year.

Cramer believes that the stocks of many good companies are being dragged down by the S&P 500 since the Index is up just 1.4% year-to-date. "I am talking about all the juicy stocks that are being thrown away right now that have no business being thrown away, and are only going down because they are a part of the S&P 500," he wrote in a Real Money post.

TheStreet paired Cramer's health care sector picks with TheStreet Ratings to determine whether they really are good investments going forward.

TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year. Year-to-date returns are based on April 6, 2015 closing prices.

Check out which stocks are Cramer's favorites.

ACT Chart ACT data by YCharts

1. Actavis Plc (ACT)
Year-to-date Return:
15.7%

Actavis plc develops, manufactures, and sells generic, brand, and biosimilar pharmaceuticals. It offers over-the-counter products. The company also provides biosimilar products in women's health, oncology, and other therapeutic categories.

Jim Cramer told viewers on Mad Money last week that Actavis, along with Kraft Foods (KRFT) will be the two "go-to choices" for money managers looking for quality, high-growth options.

"After its acquisition of Allergan, Actavis now finds itself with an incredible product portfolio, one that Cramer thinks could earn up to $25 a share in earnings by 2017. Given a 20 times earnings multiple, that means Actavis could be worth up to $500 a share, he said.

TheStreet Ratings rates Actavis a buy, B-.

TheStreet Ratings said: "We rate ACTAVIS PLC (ACT) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth greatly exceeded the industry average of 8.3%. Since the same quarter one year prior, revenues rose by 46.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, ACT's share price has jumped by 41.68%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ACT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has increased to $811.60 million or 32.03% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -9.09%.
  • The gross profit margin for ACTAVIS PLC is rather high; currently it is at 58.07%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -18.06% is in-line with the industry average.
  • The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that ACT's debt-to-equity ratio is low, the quick ratio, which is currently 0.52, displays a potential problem in covering short-term cash needs.

Here's a transcript of Actavis' fourth-quarter earnings conference call.

 

 

ABC Chart ABC data by YCharts

2. AmerisourceBergen Corp. (ABC)
Year-to-date Return:
24.8%

AmerisourceBergen Corporation sources and distributes pharmaceutical products to healthcare providers, pharmaceutical and biotech manufacturers, and specialty drug patients in the United States and internationally.

"You know how you could have -- and may still -- handily beat the averages? Simply develop a portfolio of healthcare companies of all shapes and sizes that do nothing but try to service the colossus that is the American medical system," Jim Cramer wrote in a recent Real Money post.

"Beyond biotechs, the second group that astounds remains the companies that rein in costs to the system: AmerisourceBergen, McKesson (MCK) and Cardinal Health (CAH) continue to dominate. These stocks never quit and the analysts' love for them never stops. These are perhaps the most amazing stocks of the era because what they do is so obvious and they do it so consistently that it's almost like these stocks were created for stock market performance," Cramer wrote.

TheStreet Ratings rates AmerisourceBergen a hold, C+.

TheStreet Ratings said: "We rate AMERISOURCEBERGEN CORP (ABC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 18.3%. Since the same quarter one year prior, revenues rose by 15.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 189.37% to $896.96 million when compared to the same quarter last year. In addition, AMERISOURCEBERGEN CORP has also vastly surpassed the industry average cash flow growth rate of 111.59%.
  • Compared to its closing price of one year ago, ABC's share price has jumped by 69.97%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Providers & Services industry and the overall market, AMERISOURCEBERGEN CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AMERISOURCEBERGEN CORP is currently extremely low, coming in at 2.24%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -0.59% trails that of the industry average.

Here's a transcript of AmericsourceBergen's first-quarter earnings conference call.

BSX Chart BSX data by YCharts

3. Boston Scientific Corp. (BSX)
Year-to-date Return:
33.4%

Boston Scientific Corporation develops, manufactures, and markets medical devices for use in various interventional medical specialties worldwide. The company operates in three segments: Cardiovascular, Rhythm Management, and MedSurg.

Boston Scientific was one of the biggest winners of the first quarter, according to Jim Cramer, as it" continues building a better mousetrap, one that helps keep patients happy and health care costs down."

TheStreet Ratings rates Boston Scientific a buy, C+.

TheStreet Ratings said: "We rate BOSTON SCIENTIFIC CORP (BSX) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BSX's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, BSX's share price has jumped by 29.58%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, BSX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has significantly increased by 61.17% to $440.00 million when compared to the same quarter last year. In addition, BOSTON SCIENTIFIC CORP has also vastly surpassed the industry average cash flow growth rate of -7.21%.
  • The gross profit margin for BOSTON SCIENTIFIC CORP is currently very high, coming in at 74.40%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -15.84% is in-line with the industry average.
  • The debt-to-equity ratio is somewhat low, currently at 0.66, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that BSX's debt-to-equity ratio is low, the quick ratio, which is currently 0.62, displays a potential problem in covering short-term cash needs.

Here's a transcript of Boston Scientific's fourth-quarter earnings conference call.

CAH Chart CAH data by YCharts

4. Cardinal Health Inc. (CAH)
Year-to-date Return:
11.4%

Cardinal Health, Inc., a healthcare services company, provides pharmaceutical and medical products and services in the United States and internationally. The company operates in two segments, Pharmaceutical and Medical.

"You know how you could have -- and may still -- handily beat the averages? Simply develop a portfolio of healthcare companies of all shapes and sizes that do nothing but try to service the colossus that is the American medical system," Jim Cramer wrote in a recent Real Money post.

"Beyond biotechs, the second group that astounds remains the companies that rein in costs to the system: AmerisourceBergen, McKesson (MCK) and Cardinal Health continue to dominate. These stocks never quit and the analysts' love for them never stops. These are perhaps the most amazing stocks of the era because what they do is so obvious and they do it so consistently that it's almost like these stocks were created for stock market performance," Cramer wrote.

TheStreet Ratings rates Cardinal Health a buy, A+.

TheStreet Ratings said: "We rate CARDINAL HEALTH INC (CAH) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, revenue growth, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 27.42% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • CARDINAL HEALTH INC has improved earnings per share by 8.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, CARDINAL HEALTH INC increased its bottom line by earning $3.37 versus $0.95 in the prior year. This year, the market expects an improvement in earnings ($4.35 versus $3.37).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 18.3%. Since the same quarter one year prior, revenues rose by 14.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Health Care Providers & Services industry and the overall market, CARDINAL HEALTH INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 2475.67% to $953.00 million when compared to the same quarter last year. In addition, CARDINAL HEALTH INC has also vastly surpassed the industry average cash flow growth rate of 111.59%.

Here's a transcript of Cardinal Health's second-quarter earnings conference call.

 

CERN Chart CERN data by YCharts

5. Cerner Corp. (CERN)
Year-to-date Return:
13.5%

Cerner Corporation designs, develops, markets, installs, hosts, and supports healthcare information technology, healthcare devices, hardware, and content solutions for healthcare organizations and consumers in the United States and internationally.

"You know how you could have -- and may still -- handily beat the averages? Simply develop a portfolio of healthcare companies of all shapes and sizes that do nothing but try to service the colossus that is the American medical system," Jim Cramer wrote in a recent Real Money post.

Cramer breaks the health care group into six categories. "Sixth, there are the companies that are perceived as saving the system money: Perrigo (PRGO), Teva (TEVA), Mylan (MYL) and Cerner. The first three are generic drug companies that have been on fire of late and the [fourth] is the consistent supplier of healthcare solutions," he wrote.

TheStreet Ratings rates Cerner a buy, A-.

TheStreet Ratings said: "We rate CERNER CORP (CERN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 147.05% and other important driving factors, this stock has surged by 29.22% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CERN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CERNER CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CERNER CORP increased its bottom line by earning $1.50 versus $1.13 in the prior year. This year, the market expects an improvement in earnings ($2.11 versus $1.50).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Technology industry. The net income increased by 146.2% when compared to the same quarter one year prior, rising from $60.06 million to $147.87 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 22.7%. Since the same quarter one year prior, revenues rose by 16.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CERN's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 3.30, which clearly demonstrates the ability to cover short-term cash needs.

Here's a transcript of Cerner's fourth-quarter earnings conference call.

CI Chart CI data by YCharts

6. Cigna Corp. (CI)
Year-to-date Return:
28%

Cigna Corporation, a health services organization, provides insurance and related products and services in the United States and internationally.

"You know how you could have -- and may still -- handily beat the averages? Simply develop a portfolio of healthcare companies of all shapes and sizes that do nothing but try to service the colossus that is the American medical system," Jim Cramer wrote in a recent Real Money post.

Cramer breaks the health care group into six categories. "The third group health group that never seems to stop delivering, despite endless attempts by analysts to call the top? The health maintenance organizations that turned out to be the biggest winners of the Affordable Care Act: Aetna (AET), Anthem (ANTM), Cigna, Humana (HUM) and UnitedHealth (UNH)," Cramer wrote. "The charitable trust got a fantastic move out of Cigna and it turned out we got a small fraction of what this company's stock has given you."

TheStreet Ratings rates Cigna a buy, A+.

TheStreet Ratings said: "We rate CIGNA CORP (CI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 18.3%. Since the same quarter one year prior, revenues slightly increased by 9.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.48, is low and is below the industry average, implying that there has been successful management of debt levels.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Health Care Providers & Services industry and the overall market, CIGNA CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 37.20% and other important driving factors, this stock has surged by 56.97% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CIGNA CORP has improved earnings per share by 37.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CIGNA CORP increased its bottom line by earning $7.82 versus $5.20 in the prior year. This year, the market expects an improvement in earnings ($8.45 versus $7.82).

 

Here's a transcript of Cigna's fourth-quarter earnings conference call.

 

 

EW Chart EW data by YCharts

7. Edwards Lifesciences Corp. (EW)
Year-to-date Return:
9.8%

Edwards Lifesciences Corporation provides products and technologies to treat structural heart disease and critically ill patients worldwide.

"We have said over and over again, its new device, which can be put in without doctors having to crack the chest cavity to improve the heart's pumping ability, is by far the better mousetrap," Cramer wrote in a Real Money post. "This is now going on three years I have been saying this, ever since my late father became a candidate for its usage. Now people discover it? Now? And you know what? Even though it is up huge, this one's probably not done. It makes sense for any major drug or device company to buy them. Still. Even up here."

TheStreet Ratings rates Edwards Lifesciences a buy, B+.

TheStreet Ratings said: "We rate EDWARDS LIFESCIENCES CORP (EW) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 0.9%. Since the same quarter one year prior, revenues rose by 11.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • EW's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 4.06, which clearly demonstrates the ability to cover short-term cash needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Health Care Equipment & Supplies industry and the overall market, EDWARDS LIFESCIENCES CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 47.05% and other important driving factors, this stock has surged by 89.57% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, EW should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income increased by 45.4% when compared to the same quarter one year prior, rising from $75.10 million to $109.20 million.

Here's a transcript of Edwards Lifesciences' fourth-quarter earnings conference call.

 

HUM Chart HUM data by YCharts

8. Humana Inc. (HUM)
Year-to-date Return:
24.1%

Humana Inc., together with its subsidiaries, operates as a health and well-being company. The company operates through three segments: Retail, Employer Group, and Healthcare Services.

"You know how you could have -- and may still -- handily beat the averages? Simply develop a portfolio of healthcare companies of all shapes and sizes that do nothing but try to service the colossus that is the American medical system," Jim Cramer wrote in a recent Real Money post.

Cramer breaks the health care group into six categories. "The third group health group that never seems to stop delivering, despite endless attempts by analysts to call the top? The health maintenance organizations that turned out to be the biggest winners of the Affordable Care Act: Aetna (AET), Anthem (ANTM), Cigna, Humana and UnitedHealth (UNH)," Cramer wrote.

TheStreet Ratings rates Edwards Lifesciences a buy, B.

TheStreet Ratings said: "We rate HUMANA INC (HUM) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • HUM's revenue growth has slightly outpaced the industry average of 18.3%. Since the same quarter one year prior, revenues rose by 21.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.40, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.45, which illustrates the ability to avoid short-term cash problems.
  • Powered by its strong earnings growth of 594.73% and other important driving factors, this stock has surged by 56.82% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HUM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 583.3% when compared to the same quarter one year prior, rising from -$30.00 million to $145.00 million.

Here's a transcript of Humana's fourth-quarter earnings conference call.

MDT Chart MDT data by YCharts

9. Medtronic Plc (MDT)
Year-to-date Return:
7.1%

Medtronic plc, a healthcare solutions company, provides medical technologies, services, and solutions worldwide. It operates through three segments: Cardiac and Vascular Group, Restorative Therapies Group, and Diabetes Group.

"You know how you could have -- and may still -- handily beat the averages? Simply develop a portfolio of healthcare companies of all shapes and sizes that do nothing but try to service the colossus that is the American medical system," Jim Cramer wrote in a recent Real Money post.

"Those that have augmented their fortunes through mergers: Actavis, Becton Dickinson (BDX), Medtronic, Mallinckrodt (MNK) and Thermo Fisher TMO," Cramer wrote. "These companies have many years of earnings growth ahead either because of they are now inverted (Actavis and Medtronic) or because their acquisitions have so much synergy. These stocks are miracles, frankly, with Actavis being the best example."

TheStreet Ratings rates Medtronic a buy, A+.

TheStreet Ratings said: "We rate MEDTRONIC PLC (MDT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, solid stock price performance, increase in net income and good cash flow from operations. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • MDT's revenue growth has slightly outpaced the industry average of 0.9%. Since the same quarter one year prior, revenues slightly increased by 3.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Health Care Equipment & Supplies industry average. The net income increased by 28.2% when compared to the same quarter one year prior, rising from $762.00 million to $977.00 million.
  • Net operating cash flow has slightly increased to $1,767.00 million or 9.61% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -7.21%.

 

Here's a transcript of Medtronic's third-quarter earnings conference call.

 

 

MCK Chart MCK data by YCharts

10. McKesson Corp. (MCK)
Year-to-date Return:
8.1%

McKesson Corporation delivers pharmaceuticals, medical supplies, and health care information technologies to the healthcare industry in the United States and internationally. The company operates in two segments, McKesson Distribution Solutions and McKesson Technology Solutions.

"You know how you could have -- and may still -- handily beat the averages? Simply develop a portfolio of healthcare companies of all shapes and sizes that do nothing but try to service the colossus that is the American medical system," Jim Cramer wrote in a recent Real Money post.

"Beyond biotechs, the second group that astounds remains the companies that rein in costs to the system: AmerisourceBergen, McKesson and Cardinal Health continue to dominate. These stocks never quit and the analysts' love for them never stops. These are perhaps the most amazing stocks of the era because what they do is so obvious and they do it so consistently that it's almost like these stocks were created for stock market performance," Cramer wrote.

TheStreet Ratings rates McKesson a buy, A+.

TheStreet Ratings said: "We rate MCKESSON CORP (MCK) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, good cash flow from operations, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 18.3%. Since the same quarter one year prior, revenues rose by 36.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 187.14% and other important driving factors, this stock has surged by 26.51% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • MCKESSON CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, MCKESSON CORP increased its bottom line by earning $5.92 versus $5.62 in the prior year. This year, the market expects an improvement in earnings ($10.92 versus $5.92).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 626.1% when compared to the same quarter one year prior, rising from $65.00 million to $472.00 million.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Health Care Providers & Services industry and the overall market, MCKESSON CORP's return on equity exceeds that of both the industry average and the S&P 500.

 

Here's a transcript of McKesson's third-quarter earnings conference call.

 

PRGO Chart PRGO data by YCharts

11. Perrigo Co. Plc (PRGO)
Year-to-date Return:
-1.3%

Perrigo Company plc, through its subsidiaries, develops, manufactures, and distributes over-the-counter (OTC) and generic prescription (Rx) pharmaceuticals, nutritional products, and active pharmaceutical ingredients (API).

"You know how you could have -- and may still -- handily beat the averages? Simply develop a portfolio of healthcare companies of all shapes and sizes that do nothing but try to service the colossus that is the American medical system," Jim Cramer wrote in a recent Real Money post.

Cramer breaks the health care group into six categories. "Sixth, there are the companies that are perceived as saving the system money: Perrigo, Teva (TEVA), Mylan (MYL) and Cerner. The first three are generic drug companies that have been on fire of late and the [fourth] is the consistent supplier of healthcare solutions," he wrote. "Perrigo has always been my favorite because of its unique combination of knock-offs and prescription drugs."

TheStreet Ratings rates Perrigo a buy, B.

TheStreet Ratings said: "We rate PERRIGO CO PLC (PRGO) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, compelling growth in net income, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 8.3%. Since the same quarter one year prior, revenues slightly increased by 9.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.43, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 181.5% when compared to the same quarter one year prior, rising from -$86.10 million to $70.20 million.
  • Net operating cash flow has significantly increased by 124.17% to $272.60 million when compared to the same quarter last year. In addition, PERRIGO CO PLC has also vastly surpassed the industry average cash flow growth rate of -9.09%.
  • 47.67% is the gross profit margin for PERRIGO CO PLC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.55% trails the industry average.

Here's a transcript of Perrigo's second-quarter earnings conference call.

 

 

UNH Chart UNH data by YCharts

12. UnitedHealth Group Inc. (UNH)
Year-to-date Return:
16.4%

UnitedHealth Group Incorporated operates as a diversified health and well-being company in the United States.

"You know how you could have -- and may still -- handily beat the averages? Simply develop a portfolio of healthcare companies of all shapes and sizes that do nothing but try to service the colossus that is the American medical system," Jim Cramer wrote in a recent Real Money post.

Cramer breaks the health care group into six categories. "The third group health group that never seems to stop delivering, despite endless attempts by analysts to call the top? The health maintenance organizations that turned out to be the biggest winners of the Affordable Care Act: Aetna (AET), Anthem (ANTM), Cigna, Humana and UnitedHealth," Cramer wrote.

TheStreet Ratings rates United Health a buy, A+.

TheStreet Ratings said: "We rate UNITEDHEALTH GROUP INC (UNH) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • UNH's revenue growth trails the industry average of 18.3%. Since the same quarter one year prior, revenues slightly increased by 7.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 43.51% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, UNH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • UNITEDHEALTH GROUP INC has improved earnings per share by 9.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, UNITEDHEALTH GROUP INC increased its bottom line by earning $5.70 versus $5.50 in the prior year. This year, the market expects an improvement in earnings ($6.20 versus $5.70).
  • Net operating cash flow has significantly increased by 127.43% to $2,429.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 111.59%.
  • The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that UNH's debt-to-equity ratio is low, the quick ratio, which is currently 0.62, displays a potential problem in covering short-term cash needs.

Here's a transcript of United Health's fourth-quarter earnings conference call.

 

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