Investing

Baby Boomers Retiring and Spending Big: 5 Companies May Benefit Huge

CVS Health

This top stock has been hit hard this year, down over 15% since May, and it also resides in the UBS dividend ruler portfolio. CVS Health Corp. (NYSE: CVS) provides integrated pharmacy health care services. Its Pharmacy Services segment offers pharmacy benefit management solutions, such as plan design and administration, formulary management.

The Retail/LTC segment sells prescription and over-the-counter drugs, beauty products and cosmetics, personal care products, convenience foods, seasonal merchandise and greeting cards, as well as provides photo finishing services.

The company operates 9,655 retail stores in 49 states, the District of Columbia, Puerto Rico and Brazil, primarily under the CVS Pharmacy, CVS, Longs Drugs, Navarro Discount Pharmacy and Drogaria Onofre names; online retail pharmacy websites; and 32 on-site pharmacy stores, long-term care pharmacy operations and retail health care clinics.

Some think that Warren Buffett may have his eye on the company.

CVS investors receive a 1.94% dividend. The UBS price target is $107, and the consensus target is $107.70. Shares closed Wednesday at $87.57.

Eli Lilly

This is another stock with substantial upside potential. Eli Lilly and Co. (NYSE: LLY) is a global health care company with numerous core products in a number of primary-care pharmaceutical markets. The company generates revenues from its pharmaceutical product and animal health segments.

The product portfolio includes Zyprexa (for schizophrenia and bipolar disorder), Gemzar (pancreatic cancer), Evista (osteoporosis), Cymbalta (depression), Cialis (erectile dysfunction), Strattera (attention deficit hyperactivity disorder), Erbitux (cancer) and Alimta (chemotherapy). Eli Lilly also has a strong presence in the diabetes market.

The company posted third-quarter results well below Wall Street’s expectations, prompting shares to plummet to a four-month low, before rebounding. The stock is down almost 10% on the year and is offering investors an outstanding entry point. Top Wall Street analysts are still very focused on the company’s outstanding late-stage product pipeline, which they and others view as very undervalued.

Shareholders receive a 2.66% dividend. The consensus price target is $97.40. Shares closed Wednesday at $76.76.

Medtronic

This company is now based in Ireland after the gigantic merger with Covidien in 2015. Medtronic PLC (NYSE: MDT) is a medical devices giant, and many on Wall Street saw this historical merger, probably one of the largest in the medtech industry, as a momentous event, leading to the creation of a unique company that combines the extensive and innovative abilities of both Medtronic and Covidien. The combined company officially has joint forces of over 85,000 employees present in more than 160 countries.

Top analysts feel that the contributions from Medtronic’s three growth drivers, which they cite as therapy innovation, globalization and services/solutions, should support a 5% or greater constant currency top-line growth this year and beyond. Some also feel that the Covidien earnings potential is underappreciated, and the change in domicile is also a positive.

Medtronic investors are paid a 2.12% dividend. The $96 UBS price target compares to the consensus target of $94.63. The shares closed on Wednesday at $81.12.

Obviously health care companies benefit from an aging demographic, which is also living longer, but the baby boomers will be cruising and spending money in a big way. It is expected that the boomers will inherit a stunning $11.6 trillion, most of it in later middle-age years. Add that to their savings and investments from long careers, and their will be a ton of cash to be spent.