Are these the best mental health stocks?
Find out why businesses and investors are increasingly putting their money into mental health start-ups and how you can invest in or trade on mental health stocks with us.
What are mental health stocks?
Mental health stocks are pharmaceutical company shares related to the following: medicines that treat mental illness, novel approaches to therapy, guides to mental wellness, and disruptive innovations for mental wellbeing.
The past decade has seen a major increase in mental health awareness, worldwide. There have been many reasons for this, including celebrities and high-profile individuals sharing their struggles with mental health. Social media users – especially Gen Z and millennials – talk about mental health online more and more.
Businesses and investors are increasingly putting their money to mental health start-ups. There’s also been a rise in the adoption of Mental Health Awareness Months in countries around the world. In 2015, the World Health Organisation (WHO) incorporated mental health in their sustainable development goals.
At the same time, the WHO found that mental health conditions have increased worldwide. Depression is now the leading cause of disability worldwide, while suicide is the fourth leading cause of death among 15- to 29-year-olds. A 2017 study estimated that 792 million people lived with a mental health disorder – that’s about one in ten people globally.
Top 5 mental health stocks to watch
Note that these companies aren’t necessarily the the best mental health stocks, but they’re some of the most popular choices based on various factors including market cap, future growth prospects and latest results.
Compass Pathways
Compass Pathways (CMPS) is a publicly traded medical care facilities business in the US. It develops synthetic psilocybin (a psychedelic prodrug compound found naturally in psychedelic mushrooms) into antidepressants. Compass Pathways aims to cure treatment-resistant depression (TRD).
Psychedelics like psilocybin have been hailed as the next big thing in mental health care, meaning Compass Pathways is well ahead of the curve. Many also consider the company to be at the forefront of psilocybin research. Moreover, psilocybin may be able to treat other illnesses as well, and Compass Pathways is expanding their research into post-traumatic stress disorder and anorexia nervosa.
Teladoc Health
Teladoc (TDOCN) provides telehealth services to the public – video or phone appointments between a patient and their doctor or medical health practitioner. This increases access and convenience for patients.
This US company got a big boost when it was incorporated in Amazon’s virtual assistant technology, Alexa – providing voice activated virtual medical health care to users. New York’s largest healthcare provider, Northwell Health, partnered with Teladoc to improve nationwide virtual care in the United States.
While consumers are increasingly adopting telehealth services, the biggest enhancement to Teladoc will be its business-to-business offerings. In other words, selling its services to entire companies for use for their employees, rather than to individual users.
Acadia Healthcare
Acadia Health (ACHC) runs 600 behavioural healthcare facilities in the US, UK and Puerto Rico. These include residential treatment centres, psych hospitals, outpatient clinics and therapeutic school-based programmes.
One of its aims is to expand into under-resourced markets, a strategy that has served it well over the past few years. The growing demand for its services has ensured a steady financial performance – with the company recently reporting an almost-14% increase in revenue YoY.
ATAI Life Sciences
German biopharmaceutical company ATAI Life Sciences aims to treat mental illness with psychedelics. Founded in 2018, the company creates, invests, and buys businesses that develop psychedelic therapies (ATAI holds a 20.8% share in Compass Pathways).
Its aim is to advance treatment for TRD, opioid use disorder, generalised anxiety disorder and post-traumatic stress disorder. The company has had celebrity investors, including UK singer Liam Payne, US deejay Diplo and US entrepreneur Steven Bartlett, and has gained media attention due to its focus of ‘treating the patient and not the disease’.
Eli Lilly and Co
Pharmaceutical heavyweight Eli Lilly and Co (LLY) is headquartered in the US and operates in 19 countries. The third largest drug manufacturer in the world, it produces two of the globe’s most prescribed antidepressants – Prozac and Cymbalta. Eli Lilly distributes to approximately 125 countries.
Eli Lilly invests heavily in research and development and acquisitions, which mitigates sales losses when drug patents expire.
How to invest in or trade on mental health stocks
How to invest in mental health stock with us
- Create a share dealing account or log into your existing account
- Search for the stock you’d like to invest in
- Select ‘buy’ in the deal ticket (you can only go long when investing)
- Choose the number of shares you want to buy
- Open and monitor your position
Share dealing mental health stocks
Open a share dealing account to buy mental health stocks and own them outright. You can make profit if you sell them at a higher price and earn dividends if the company grants them. When you own equity in a company, you’ll also have shareholder voting rights.
With us, you’ll get exposure to international stocks or ETFs with zero commission to pay on US share trades.1 Note that share dealing isn’t leveraged, which means you’ll have to put up the full value of the position when opening it.
How to trade on mental health stock with us
- Create a trading account or log into your existing account
- Search for the mental health stock you want to trade
- Select ‘buy’ to go long, or ‘sell’ to go short
- Set your position size and take steps to manage your risk
- Open and monitor your position
Spread betting on mental health stocks
When spread betting, you’re staking an amount of money per point of price movement in the underlying asset. You’ll speculate on rising or falling markets by going long if you think that the price will rise or go short if you think that it’ll fall.
Spread bets are popular because you can trade without paying capital gains tax or stamp duty.2 Additionally, you can trade spread bets on leverage, which means that you’ll put down a small initial deposit – known as margin – to open a position.
CFD trading on mental health stocks
With CFD trading, you’ll enter into an agreement to exchange the difference in price from the point at which the contract is opened to when it’s closed. Like with spread bets, you can go long and short to predict the direction of the underlying market price.
CFDs can be a useful tool to hedge your portfolio for tax-deductible purposes.2 They can also be traded on leverage to magnify your profits with just a fraction of the size value to open the position.
Remember that while leverage can amplify your profit, you stand to lose far more than your initial deposit. That’s why you need to take steps to manage your risk effectively.
Top mental health stocks summed up
- Mental health stocks are pharmaceutical company shares related to the broader psychiatric industry, for example, medicines that treat mental illness
- There has been an increased awareness about mental illness over the past decade, and mental health stocks have also gained significant traction
- Some of the most popular mental health stocks include Compass Pathways, Teladoc Health, Arcadia Healthcare, ATAI Life Sciences and Eli Lilly
- You can invest in or trade on mental health stocks with us – using share dealing, spread betting or CFD trading
Footnotes
1 Trade in your share dealing account three or more times in the previous month to qualify for our best commission rates. Please note published rates are valid up to £25,000 notional value. See our full list of share dealing charges and fees.
2 Tax laws are subject to change and depend on individual circumstances. Tax law may differ in a jurisdiction other than the UK.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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