While the direction of the stock markets is unpredictable, the growth of the aging population is entirely predictable. Along with an aging population come additional healthcare, beauty and wellness needs. Baby boomers are arguably the largest and wealthiest generation in the country, followed by Gen-X-ers who are approaching mid-life to retirement ages. Baby boomers are estimated to be retiring at a rate of 10,000 per day. Companies with products and services that accommodate the needs of aging demographics can expect to see steady growth. Here are two companies that are benefactors of the aging population that should be on your watch list.
Abbott Labs is a diversified global healthcare company that treats chronic illnesses with products catering to the entire life cycle. From prenatal care with prenatal vitamins, genetic testing and Similac baby formula through infancy and childhood with Pedialyte, Pediasure and vaccines for rubella, measles and mumps. For adulthood, Abbott makes glucose monitor systems like the FreeStyle Libre, which doesn't require a fingerstick, which is the strip to collect blood after pricking your finger.
Addressing the Aging Population's Chronic Diseases
With the aging process comes chronic diseases. Abbott has treatments and tools for some of the most common chronic diseases. It has stents, heart valves and pacemakers for cardiovascular diseases through its complementary acquisition of St. Jude Medical for $25 billion in 2017. Its FreeStyle Libre was the country's first non-fingerstick continuous glucose monitoring system (CGM) for diabetes management. Abbott also carries insulin pumps to help manage blood sugar levels. For infectious diseases, Abbott provides many diagnostic tests, vaccines and treatments for COVID-19, HIV/AIDS and hepatitis C. For pain and movement disorders, Abbott provides neuromodulation devices and treatments for tremors, chronic pain and Parkinson's.
Dividend Aristocrat
Abbott is widely accepted as a dividend aristocrat for raising its annual dividend for over 25 years. The company started paying a dividend in 1924 and has increased its dividend annually since 1973. Its long history of consistent profits helps to ensure continued dividend payout for the long term. Its 2.08% annual dividend yield may be small, but long-term investors can attest to its compounding prowess, especially when instituting its dividend reinvestment program (DRIP).
Staying the Course
Abbott is experiencing normalization from the pandemic as COVID-19 testing revenues dwindle. The company reported its Q2 2023 earnings of $1.08 per share, beating estimates by three cents. Revenues fell 11.4% YoY to $9.98 billion but still beat analyst estimates of $9.71 billion. Abbott reaffirmed guidance for full-year 2023 EPS of $4.30 to $4.50 versus $4.40 analyst estimates. ABT shares are trading down 10.4% YTD, paying a 2.08% annual dividend yield.
Abbott Laboratories analyst ratings and price targets are at MarketBeat. Abbott Laboratories' peers and competitor stocks can be found with the MarketBeat stock screener.
Weekly Rectangle Pattern
The weekly candlestick charts illustrate the near-yearlong rectangle pattern, which started in January 2023 at the $114.05 upper trendline. ABT fell to a low of $95.45 in March 2023 to establish the lower trendline of the rectangle. ABT triggered the weekly market structure low (MSL) bounce on the $98.47 trigger as it attempted to break out but rejected back down under the $114.05 upper trendline. ABT is falling again as it tests the weekly MSL trigger. The weekly relative strength index (RSI) is falling through the 40-band. Pullback support levels are at $95.45 rectangle lower trendline, $92.58, $89.94 and $87.53.
Skincare is a major factor concerning the aging population. Everyone eventually visits a dermatologist or aesthetician at some point. If you've ever been to one recently, you've likely heard of a HydraFacial developed by The Beauty Health Company. There are over 28,000 HydraFacial machines in service, providing facials daily around the world. The HydraFacial applies its patented Vortex-Fusion™ technology that uses water to create a vortex to clean, exfoliate and hydrate the skin. Dermatologists widely recommend it as part of a comprehensive skincare routine. Unlike regular facials, specialized training is needed to operate a HydraFacial machine. Licensed aestheticians and board-certified dermatologists trained in HydraFacial treatments are recommended. There is no recovery downtime (like a facial or chemical peels), and the results are immediate.
Growth and Margin Expansion
In its Q2 2023 earnings report, the company reported non-GAAP profits of 3 cents per share on revenues of $117.5 million, up 13.5% YoY. Margins made an amazing recovery, rebounding after restoring its Syndeo machine exchange issues. Gross margins are expected to grow by 500 bps by the end of 2025. China revenues are expected to hit hypergrowth with its reopening, as it saw 167% YoY sales growth in the quarter. Additionally, insiders have been buying shares as they bought nearly $600,000 of SKIN stocks in August 2023.
The Beauty Health Company analyst ratings and price targets are at MarketBeat.
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