From novel pharmaceuticals to telemedicine, most healthcare companies are on a mission to drive better patient outcomes. But speed bumps such as inventory destockings have persisted in the wake of COVID-19, and over the past six months, the industry has pulled back by 13.2%. This performance was significantly worse than the S&P 500’s 2.4% decline.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. With that said, here are two healthcare stocks we think can generate sustainable market-beating returns and one we’re passing on.

One HealthcareStock to Sell:

Jazz Pharmaceuticals (JAZZ)

Market Cap: $6.66 billion

Originally founded in 2003 and now headquartered in Ireland following a 2012 tax inversion merger, Jazz Pharmaceuticals (NASDAQGS:JAZZ) develops and markets medicines for sleep disorders, epilepsy, and cancer, with a focus on treatments for patients with limited therapeutic options.

Why Does JAZZ Worry Us?

1. Annual revenue growth of 4.3% over the last two years was below our standards for the healthcare sector
2. Day-to-day expenses have swelled relative to revenue over the last five years as its adjusted operating margin fell by 6.7 percentage points
3. Below-average returns on capital indicate management struggled to find compelling investment opportunities, and its decreasing returns suggest its historical profit centers are aging

At $108.25 per share, Jazz Pharmaceuticals trades at 4.6x forward P/E. If you’re considering JAZZ for your portfolio, see our FREE research report to learn more.

Two Healthcare Stocks to Watch:

ResMed (RMD)

Market Cap: $35.87 billion

Founded in 1989 to address the then-underdiagnosed condition of sleep apnea, ResMed (NYSE: RMD) develops cloud-connected medical devices and software solutions that treat sleep apnea, COPD, and other respiratory disorders for home and clinical use.

Why Are We Fans of RMD?

1. Business is well-positioned no matter the global macroeconomic backdrop as its constant currency revenue growth averaged 12% over the past two years
2. Performance over the past five years shows its incremental sales were extremely profitable, as its annual earnings per share growth of 15.7% outpaced its revenue gains
3. Free cash flow margin increased by 7.1 percentage points over the last five years, giving the company more capital to invest or return to shareholders

ResMed is trading at $244.79 per share, or 24.1x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.

Cencora (COR)

Market Cap: $56.45 billion

Formerly known as AmerisourceBergen until its 2023 rebranding, Cencora (NYSE: COR) is a global pharmaceutical distribution company that connects manufacturers with healthcare providers while offering logistics, data analytics, and consulting services.

Why Are We Bullish on COR?

1. Unparalleled scale of $310.2 billion in revenue enables it to spread administrative costs across a larger membership base
2. Share repurchases over the last five years enabled its annual earnings per share growth of 14.5% to outpace its revenue gains
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

Cencora’s stock price of $291.24 implies a valuation ratio of 18x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

High-Quality Stocks for All Market Conditions

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.