Money Morning Quantitative Specialist Chris Johnson has two top picks for the best healthcare stocks to buy in July.
Chris’ proprietary "Best in Breed" (BiB) system finds both aggressive companies and discovers undervalued sectors poised for massive gains.
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And his BiB system has uncovered breakout potential for the healthcare industry.
That led Chris to take a deep dive into the sector, and he came away with two healthcare stocks with huge upside potential…
Top Stocks To Invest In 2019: Celgene Corporation(CELG)
I’ve owned Celgene when its stock was hot, and I’ve owned it when it was not. There hasn’t been much heat for the big biotech over the last year. However, my hunch is that will change.
Celgene stock trades at less than eight times expected earnings. The biotech stock is cheap for two primary reasons. First, Celgene depends on Revlimid for 63% of its total revenue, and generic-drug makers are challenging the patents for Revlimid. Second, the company has experienced some pipeline setbacks, which makes investors even more anxious about the potential threat to Revlimid. These factors arguably make Celgene the riskiest big biotech stock on the market.
But Celgene continues to deliver exceptionally strong earnings. I don’t see the stock going much lower as long as that doesn’t change — and I don’t think it will. Any good news should provide a nice catalyst for the biotech. What’s more, the mere anticipation of good news should boost the stock.
Investors have plenty of anticipating to do. Celgene should file yet again for approval of ozanimod in treating multiple sclerosis in early 2019. Solid phase 3 results for luspatercept in treating myelodysplastic syndromes (MDS), a group of rare blood disorders, should lead to regulatory filings in the first half of next year. Celgene also expects to submit cell therapy liso-cel (formerly known as JCAR017) for approval in 2019.
Those are just three potential blockbusters that Celgene has percolating in its pipeline, and there are more. In my view, the growth prospects for the biotech are really good. They’re so good that I don’t think Celgene will remain such a bargain for much longer.
Top Stocks To Invest In 2019: Royal Dutch Shell plc(RDS-A)
Royal Dutch Shell put up an almost unbelievable $14.2 billion in free cash flow in the last 12 months. That allows it to simultaneously reward shareholders with a 5.5% dividend yield and and position itself as a prime player in the future of energy — more specifically, in the coming transition from gas to electric transportation.
The world’s largest oil companies are getting hip to that game by making giant, multibillion-dollar investments in electric utilities and renewable energy technologies. Holland’s prized oil producer isn’t risking getting left behind, planning to spend up to $2 billion per year on non-fossil energy sources. So far, so good.
Royal Dutch Shell owns a 44% stake in solar project manager Silicon Ranch, it acquired U.K. electricity provider First Utility, and it owns natural gas distributor and solar technology developer MP2 Energy. That provides a solid foundation upon which to build, but it’s important for investors to note that management sets a high bar for its renewable investments.
All of its acquisitions in electricity distribution and electricity generation are expected to deliver equity rates of return of 8% to 12%, in addition to free cash generation within the next five years. In other words, Royal Dutch Shell (and a few other oil majors) isn’t just gobbling up renewable energy assets to collect shiny objects for an expensive PR game; it’s thinking strategically when deploying capital. That long-term thinking, when coupled with its impressive dividend yield, makes this oil stock a buy for investors committed to the long haul.
Top Stocks To Invest In 2019: Eli Lilly and Company(LLY)
On Feb. 9, LLY dropped to a three-year low. Since then, it’s risen 16%. That climb moved the stock to trading higher than its 50-day and 200-day moving averages.
That sort of momentum – pushing it above its moving averages – is a sign the stock is heading even higher.
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In fact, the trend lines just formed a "golden cross," one of the most bullish technical indicators investors can use. In a golden cross, the 50-day moving average rises higher than the 200-day moving average, a classic bullish sign.
The last time that happened was in February 2017 when LLY was in the midst of a killer rally that sent the market up 35% over a five-month stretch.
It gets even better. Short interest grew 20% over the past month, which means a short squeeze could push the stock even higher if the rally continues.
Given that all the signals are indicating more upside, Chris has a price target on LLY of $90 per share. That’s slightly above the highs of October and December. That move might give a double if investors play the $85 call with an Aug. 17, 2018 expiration.
But LLY isn’t the best healthcare stock on our list…