2 Soaring Healthcare Stocks to Buy and Hold for a Decade

Broadly speaking, stocks have performed pretty well this year, with the S&P 500 up 16% since January. Two that have performed significantly better than that are HCA Healthcare (NYSE: HCA) and CVS Health (NYSE: CVS), both of which have soared by more than 70% year to date. In the wake of such gains, it's natural to wonder whether there's any upside left for these high-flying companies. Is there still time to invest in them, or is it too late? In this case, the answer is that there is still time, as both could perform well over the next 10 years.

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1. HCA Healthcare

HCA Healthcare is a leading operator of healthcare facilities in the U.S. It has a vast network of facilities nationwide and established relationships with physicians, insurance companies, and government payers. This year, it has posted excellent financial results. The company's revenue in the third quarter increased by 9.6% year over year to $19.2 billion, while its net income jumped 29.4% to $1.6 billion. What's driving these results?

The increasing demand for medical services is a part. During the period, HCA Healthcare reported that same-facility admissions increased by 2.1% year over year in Q3. Meanwhile, the company is benefiting from improved payout rates from insurers, which helped boost same-facility revenue per equivalent admission by 6.6% to $18,390.

Some of these dynamics should remain major tailwinds for the company through the next decade. Seniors are a growing share of the U.S. population, and this is creating an increasing need for various types of medical care. By 2035, people 65 and older are projected to outnumber those 18 and younger for the first time in U.S. history. That shifting dynamic will inevitably lead to greater demand for healthcare.

Beyond the industrywide tailwinds, though, HCA Healthcare has implemented a strategy that should help it be a major beneficiary of that demographic shift. The company's diversified network of facilities and its investments in technology have enabled it to deliver better care to patients. That's partly why HCA Healthcare has been able to grow its market share over the years -- from 24% in 2012 to 27% as of 2022.

It now aims to boost that to 29% by 2030, and is likely to continue gaining share beyond that. HCA Healthcare is on a roll. The stock might not soar by 70% every year, but the company's prospects over the next decade suggest it could continue to deliver competitive returns.

2. CVS Health

CVS Health struggled over the past few years in the face of rising costs, particularly within its Medicare Advantage business. However, management is slowly righting the ship. Its financial results weren't exactly exceptional this year, but they were better than anticipated, and CVS Health is still making moves. It's in the middle of a multiyear plan to cut costs, for instance. It also plans to scale back on its offerings of Medicare Advantage plans -- private insurance policies for seniors that include additional benefits that traditional Medicare does not, including drug coverage.

Reducing those offerings may result in lower sales for CVS, but the healthcare leader wants to focus on profitable growth from here on out, a reasonable strategy considering its struggles in recent years. Those changes should help boost CVS Health's financial results in the next couple of years. Moreover, the company has several strengths that could help drive strong results through the next decade.

One is its ecosystem, which encompasses its pharmacy business, insurance, and primary care services. CVS Health has expanded its reach in recent years through acquisitions and the formation of new subsidiaries, including Cordavis, which will partner with biosimilar drugmakers to develop more affordable versions of expensive medicines after their patent protection expires.

Biosimilars are the equivalent of generics for large-molecule drugs, and the market for them is highly competitive, but CVS Health's ventures in this field could succeed given its already massive customer base. That's another one of the company's strengths: It has been around for decades in many communities across the U.S. and has a brand name that inspires trust and confidence.

It has also adapted to modern demands by offering fast delivery services for prescription medicines. Although the retail pharmacy industry is becoming increasingly competitive, CVS Health is well positioned to remain a leader. And it will also benefit from an aging population and growing demand for prescription drugs. All these factors make the stock attractive, and worth holding onto through 2035.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool recommends CVS Health and HCA Healthcare. The Motley Fool has a disclosure policy.