At Money Morning, we want to look past the average gains you can make investing in the S&P 500 or some blanket ETF. We're looking for stocks that can deliver big returns in a small amount of time.
And today, we found one.
Two weak earnings reports and a botched merger have pushed this stock down over the last few months. But here's why it's still one of the best healthcare stocks to buy.
For starters, the Money Morning Stock VQScore™ system has given it an extremely high score.
Time and time again, this proprietary system beats analysts to the punch, securing our upgrade and buying opportunity well before the stock breaks out.
And now, once again, the VQScore has put a stock in the Buy Zone. That means you can expect analysts left and right to up their projections in just a few weeks.
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We want to make sure you can get in before it's too late, so here's how this works.
The VQScore system assigns each profitable stock on the market a score from 1 to 4.9. Any figure of 4 or higher signals that a stock is poised for significant gains in the months ahead.
Our pick just broke the threshold to a 4.1, and it's on its way up.
But that's not the only reason we expect this one to soar.
This healthcare stock serves as a cornerstone for many investors. It's on a discount right now, but it won't be for long...
Investors Are Totally Missing This Healthcare Stock
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CVS Health Corp. (NYSE: CVS) is the largest retail pharmacy/healthcare chain in the United States.
Its pharmacy services and retail businesses are well known - the firm owns more than 9,900 retail outlets. And it owns about 26% of the U.S. pharmacy-retail market.
But a less known segment of CVS could make it a leading player in the global healthcare space.
Following its 2018 acquisition of health insurance giant Aetna, CVS established its healthcare benefits division. It now operates 1,110 walk-in healthcare clinics through MinuteClinic and has 92 million plan members through Aetna.
CVS will continue to integrate Aetna's operations this year. This creates a chance for CVS to snap out of last year's doldrums.
The firm wants to overhaul the customer experience for healthcare. It will combine technologies like virtual reality, artificial intelligence, and connected care across its thousands of retail MinuteClinics across the country.
The company plans to renovate roughly 1,500 CVS locations into HealthHUBs.
These locations will feature larger retail space dedicated to "new product categories, digital tools, on-demand health kiosks, trusted advice, and personalized care."
The goal is simple: to revolutionize personal care through direct access to the care people need, when they need it. While the clinics are not meant to compete with your primary doctor, they will cater to minor health problems and non-emergency conditions.
It will also allow patients to connect directly from home to CVS AI services. These can diagnose illnesses from home.
Should CVS find success through this avenue, the firm will aim to create an all-in-one subscription service for healthcare, similar to a Netflix account. Such a service - which can likely be supplemented through insurance payments - may provide a new source of cash flow not previously considered by firms in the space.
The deal would give CVS first-mover advantage and competitive leverage over its rival, Walgreens Boots Alliance Inc. (NYSE: WBA).
Overcoming Recent Challenges
CVS Health Corp. is off 20% from 52-week highs.
Concerns about its bottom line after the Aetna deal previously rattled investor confidence. But sentiment is back on the climb. The firm has bounced back strongly from 52-week lows experienced earlier this summer.
Pharmacies still face obstacles in drug prices, healthcare regulation, and retail pharmacy benefit payments. But the upside for CVS is hard to ignore.
The company recently reported strong earnings, increased its full-year outlook, and touted the success of the Aetna integration. It hiked its full-year profit outlook to as much as $7 per share. But that figure could go higher.
The verticalization of care and delivery creates a positive narrative and significant cost-cutting to help bolster profitability.
With a VQScore of 4.1 and growth metrics in place for CVS Health Corp. (NYSE: CVS), we see a real case for the stock hitting $92 in the year ahead. That figure would represent a 43.7% gain from today's level and blow the water out of the annual return of the S&P 500.
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