Should You Invest in DaVita?

PHOTO CREDIT: DaVita

OVERVIEW

DaVita Incorporation is a company based in the United States. The company offers dialysis services to patients around the world. The company operates over 3000 dialysis centers in the United States and 10 other countries around the world. The company was founded in 1994.

Why You Should?

  1. DaVita Incorporation is a safe investment option in an investor’s portfolio. The company offers services that are essential to maintain a high quality of life for many of its patients. Even in rough economic times, patients will still go to dialysis appointments, something that will help the company remain stable.

Why You Should Not?

  1. The company faces tough competition in the dialysis industry. Some o these companies include Fresenius, Encompass, and many others. This competition might hurt the company and its investors in the future.
  2. Davita operates a low-margin business due to the high costs to maintain healthcare facilities as well as low income (due in part because of government regulations). Low margins might hurt the company and its investors in the future.
  3. The healthcare and dialysis business is heavily regulated in the United States and many other countries around the world. For example, the company needs to maintain the highest standards around its facilities (rightfully so). In addition to this, government regulation is there in order to limit how much the company charges consumers.
  4. Due to these regulations as well as other factors, DaVita is a slow-growing business. They grow yearly on a single-digit percentage basis. The stock price has also lagged the market growth over some time periods in the past because of this. This slow-growing business has hurt investors who are looking for quick gains but is a great hold for long-term investors.
  5. In my opinion, there are better healthcare stocks to invest in. Companies like UnitedHealth, Johnson & Johnson, and others would give you a higher exposure in the healthcare industry in general. They would also yield higher in the next couple of years as well.

MY OPINION

In my opinion, DaVita is a decent long-term investment due to its position as a safe investment option that slowly grows. However, tough competition, several regulations, a slow-growing business, low margins, as well as better healthcare investments might hurt the company and its investors.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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