Morgan Stanley's Top Health-Related Stocks

Health care is an interesting market because for the most part it's remarkably stable. Here are five health care-related stocks with long-term growth potential, according to Morgan Stanley.

We’ve already listed Morgan Stanley’s stock winners with the best long-term growth potential, but what if you’re looking into a specific sector? Morgan Stanley’s original list of stock winners no matter what happens with the economy had a total of 42 stocks, but we're just taking a look at health care-related companies.

Health care is an interesting market because for the most part it’s remarkably stable. Whenever there is trouble with the economy, investors head for the health care stocks. In September, Morgan Stanley had actually trumpeted health care stocks because of how well they consistently perform.

Here are five stocks from Morgan Stanley’s list of 42 that are health care related.

Note: The EPS growth is the projected compound annual growth rate (CAGR) from 2011 to 2014; the P/E estimates are based on 2012 EPS expectations; and the PEG ratio refers to the price earnings to growth ratio, which is an indicator of the stock's valuation.

Stock information and estimates are from Morgan Stanley.

Athenahealth

Ticker: ATHN

EPS growth: 22.6%

P/E 2012: 93.6

PEG ratio: 4.1

"A leading share in the cloud-based Healthcare IT market, a growing product portfolio which can leverage its existing user base, and an entry into the enterprise market provide ATHN with a compelling secular growth story in Healthcare IT," according to Morgan Stanley's Stephen Maresca.

Cerner

Ticker: CERN

EPS growth: 19.7%

P/E 2012: 31.9

PEG ratio: 1.6

Cerner is expected to gain market share and is expected to benefit from mid-term stimulus spending on health care IT, according to Rick Goldwasser.

GNC

Ticker: GNC

EPS growth: 27.4%

P/E 2012: 16.6

PEG ratio: 0.6

Mark Wilatmuth thinks GNC would benefit from rising consumer interest in health and wellness.

Intuitive Surgical

Ticker: ISRG

EPS growth: 16.7%

P/E 2012: 34.5

PEG ratio: 2.1

Intuitive Surgical is expected to benefit from little competition in robotic surgery, according to David Lewis. Its revenues are expected to grow 20% to 23% in 2012.

Whole Foods Market

Ticker: WFM

EPS growth: 22.2%

P/E 2012: 39.8

PEG ratio: 1.8

Like Fresh Market, Whole Foods should benefit from the consumer trend in natural and organic foods and in health and wellness, according to Mark Wiltamuth.