Tariff wars, recession fears, and all-around mayhem dominate the news these days. It feels like a new world out there — one that has us fearful and unsure of where to invest our hard-earned money. This is where healthcare stocks come in.
Relatively safe and economically insensitive, these stocks offer investors a defensive place to park our money while benefiting from the aging population trend.
Here are two healthcare stocks I would buy whenever they dip in price.
Source: Getty Images
Northwest Healthcare Properties
As an owner and operator of a portfolio of medical office buildings and healthcare real estate, Northwest Healthcare Properties REIT (TSX:NWH.UN) is as defensive as it gets. Currently yielding 7.69% and rapidly recovering its balance sheet and cash flow situation, this healthcare stock is one I’d buy on a dip.
Actually, the whole last year has been a dip for Northwest Healthcare stock. It has, in fact, been languishing since the company got into trouble with the heavy debt load that it took on — a mistake that the market and investors have not gotten over yet.
But in time, I think that if the company continues to exercise caution and discipline, it’s set up well to provide steady dividend income for its investors. This is obvious in the company’s latest results. In the quarter, the company posted a 4.9% increase in net operating income, with growth coming from all regions.
Finally, Northwest continues to maintain a very high occupancy rate of 96% with a weighted average lease expiry of 13.6 years. I like this healthcare stock because its assets are inflation-indexed and characterized by long leases. This makes its cash flow profile stable and predictable. Finally, the healthcare sector is defensive and not going anywhere.
Well Health Technologies
Well Health Technologies (TSX:WELL) is another healthcare stock that I’d buy on a dip. It, too, has been weak lately, along with the whole market, so this might be a good time to consider Well Health stock.
The company is essentially digitizing the healthcare system, and its products and services have seen great demand. The primary care market in Canada is a big opportunity for Well Health, which has grown its revenue from $32 million in 2019 to $776 million in 2023.
The company’s Canadian clinics have grown by 24% in 2024, and its pipeline of Canadian public sector opportunities for technology services is worth more than $300 million in deal size. This is more than triple the public sector pipeline a year ago. Interestingly, this has been boosted by the buy Canadian sentiment, according to management.
I would have a more complete update on Well Health’s 2024 results today, except the company had to delay filing. While this is never a good thing, the delay pertains to Well Health’s Circle medical U.S. subsidiary. The U.S. attorney’s office is questioning billing practices and is requesting information on this matter.
So, again, while this is never a good thing, Circle Medical is a very small part of Well Health. In fact, it contributed a net loss in 2023 and less than 2.7% of its earnings before interest, taxes, and depreciation. Stock price weakness as a result of this should be considered an opportunity for us investors to buy.
Current estimates on Wealth Health stock are calling for earnings per share of $0.20 in 2024. This means that Well Health Technologies’s stock price is trading at an attractive 20 times earnings.
