Best Medical Device Stocks for 2026 and How to Invest

1. Abbott Laboratories

GE Healthcare Technologies (GEHC +2.16%) was spun off from General Electric in 2023. However, the large-cap company has been a leader in the medical device market for decades.

The company has four business segments: imaging, advanced visualization solutions, patient care solutions, and pharmaceutical diagnostics. Medical imaging ranks by far as its biggest moneymaker, generating more than 40% of total revenue.

Like many medical device stocks, GE Healthcare should benefit from aging populations across the world. This tailwind could drive higher demand for the company's products as older individuals require more healthcare services.

GE Healthcare appears to be in a strong position to capitalize on this opportunity. It has a great track record of innovation and invests heavily in research and development -- more than $1 billion each year.

3. Intuitive Surgical

TransMedics Group (TMDX +0.56%) is a relatively small company that markets devices that support the transportation of donor organs. Its Organ Care System (OCS) essentially keeps lungs, hearts, and livers functioning during transportation.

Its OCS presents a huge leap forward from the cold storage that's the current standard for transporting donor organs. The technology significantly increases the number of organs that, ultimately, are able to be used in transplants. It can also help greatly reduce post-transplantation complications.

This big unmet medical need provides a great opportunity for TransMedics. The company's national aviation fleet, the first dedicated exclusively to transporting donor organs, puts it in a strong position to take advantage of this opportunity.

TransMedics continues to deliver strong revenue growth. The company is also now profitable, with rapidly increasing earnings.

How to invest in medical device stocks

Steps to take to invest in medical device stocks include:

1. Open your brokerage app: Log in to your brokerage account where you handle your investments.
2. Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
3. Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
4. Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
5. Submit your order: Confirm the details and submit your buy order.
6. Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

Tips for investing in medical device stocks

Below are practical strategies and actionable tips for investors seeking to invest in medical device stocks:

• Research medical device companies' competitive positions.
• Monitor reimbursement policies by Medicare, Medicaid, and private insurers that apply to the medical devices marketed by the companies.
• Review development pipelines, focusing especially on products awaiting regulatory clearances and in late-stage testing.
• Evaluate the financial health of medical device companies, including their cash positions and debt loads.

Should you invest in medical device companies?

As is the case with most investing questions, the best answer about whether you should invest in medical device companies is that it depends. Every investor has different goals, risk tolerances, and time horizons.

One key risk associated with medical device stocks is a decline during economic downturns as healthcare providers reduce their spending. They also face volatility related to government and private payer reimbursement decisions.

Medical device companies can experience significant setbacks when products in development have problems during clinical trials or fail to win regulatory approvals. Even products that successfully reach the market can face intense competition. It's also possible that the products might cause harm to patients, potentially resulting in litigation that affects the companies' business.

Investors with short time horizons and/or low risk-tolerance levels should consider these factors. However, the long-term prospects for the medical device industry generally appear to be very good. Aging demographics and technological innovations should provide nice tailwinds for the medical device sector.

Medical device stocks are often recession-resistant when their products are must-haves for patient care. And while competition can sometimes be intense, regulatory hurdles and high research and development investment costs can create barriers to entry for new competitors. For long-term investors who don't mind the potential for volatility, medical device stocks should provide an attractive opportunity.

Factors to consider when choosing medical device stocks

What should you think about when trying to decide which medical stocks to buy? Here are some key factors to consider:

• Financial strength.
• Revenue and earnings growth.
• Market share.
• Competitive advantages.
• Development pipeline.
• Valuation.

Future outlook for the medical device market

The outlook for the medical device market looks bright. Key trends shaping the market include:

• Aging demographics in the U.S. and other countries.
• Artificial intelligence (AI) advances.
• Increased adoption of remote monitoring.
• Increased adoption of wearable devices.
• Expanded use cases for robotic surgical systems.

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