Health Stocks to Buy: An Under-the-Radar Play Set to Double in 3 Years

Health stocksFinding the top health stocks to buy can help your portfolio more than double the performance of the broader markets. The S&P 500 Health Care Sector Index is up 26.5% in 2014, while the S&P 500 has gained just 11.1%.

That's why we want to tell you about this growing medical field that targets a specific audience. Most investors haven't heard of it, but it will reach $4.8 billion in 2015. And we've found the best investment to play the sector.

The field is called "aesthetic medicine." It includes everything from plastic surgery to liposuction.

According to analysts at BCC Research, the aesthetic medicine field is expanding at an annual compound rate of 7.4%.

At the same time, the diet and exercise market is declining. In 2013, $60.5 billion was spent on diet and exercise, down 1.8% from 2012.

The reason for aesthetic medicine's sharp growth is that obesity is one of the most well-documented health issues in the United States. Currently 78.6 million Americans are obese. That's 34.9% of the population.

The number of obese Americans is expected to jump sharply over the next decade. Researchers at GlobalData estimate that 113 million Americans will be obese by 2022. An additional 81 million Americans will be considered "overweight."

Money Morning's Defense & Tech Specialist Michael A. Robinson - a 30-year veteran of the tech market - first introduced readers to this high-tech health company on Nov. 13.

"The company I have in mind successfully treated more than 4,000 patients during clinical trials," Robinson said. "It also has published more than 40 medical papers and abstracts on its science, which was developed at a teaching hospital affiliated with Harvard Medical School."

Here's why this "special situation" pick is on our health stocks to buy list - and why Robinson said it could double in the next three years...

One of the Most "Special" Health Stocks to Buy Today

The company is ZELTIQ Aesthetics Inc. (Nasdaq: ZLTQ).

ZELTIQ uses a nonsurgical, minimally invasive procedure known as cryolipolysis to eliminate unwanted body fat. In this procedure, a cooling device destroys fat cells by extracting energy from those cells without damaging other tissue.

The cryolipolysis process has no impact on skin cells. Recovery time for patients is minimal, and the procedure leaves no scarring or visible signs.

After treatment, the body's normal metabolic process eliminates the fat cells of the treated areas. This process takes between two and four months.

ZELTIQ generates most of its revenue by selling the "CoolSculpting" treatment to doctors, along with its applicators.

"Based on U.S. Census data and its own consumer surveys, the company says it could hit $2 billion in sales over the next few years," Robinson said. ZELTIQ had sales of $111.6 million in 2013.

But the best thing about this stock is its recent turnaround.

ZELTIQ went public in October 2011 and stumbled out of the gate. It opened its first day of trading at $14.50 but fell all the way to $3.85 by June 2012. That's a drop of 73.4%.

After that, the company's board decided to shake up the management team. That's where Robinson's "special situation" comes into play.

[epom key="ddec3ef33420ef7c9964a4695c349764" redirect="" sourceid="" imported="false"]

"Mark Foley became president and chief executive officer of ZELTIQ in April 2012," Robinson said. "He has more than 25 years of experience in the medical device industry, having served as an executive at several fast-growing startups later acquired by global firms."

We saw the success of the turnaround last quarter when ZELTIQ handily beat earnings-per-share estimates. Instead of posting a predicted loss of $0.10 per share, the company earned $0.12 per share. Revenue was up 55% to $45.7 million. Next quarter, the company expects to increase revenue by 37%.

ZLTQ stock has been hot, too. It's up 35% since September and 62% since June. Right now, shares are worth just over $28 each.

Robinson cautions against reading too much into the company's low profit margins. This is still a turnaround in process, after all.

"I still see plenty of upside ahead for this 'special situation,'" Robinson said. "If the company continues growing sales and earnings at anything close to its current rate, the stock could easily double in the next three years."

More from Michael Robinson: In corporate spin-offs, companies unlock hidden values in their operations and pass them on to shareholders - offering low risks and market-beating profits. Here's how to profit from massive spin-offs in just one play.

Related Articles: