Healthcare companies are pushing the status quo by innovating in areas like drug development and digital health. 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 6.6%. This drawdown is a stark contrast from the S&P 500’s 7.6% gain.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. Taking that into account, here is one healthcare stock boasting a durable advantage and two we’re steering clear of.
Two HealthcareStocks to Sell:
STAAR Surgical (STAA)
Market Cap: $881.8 million
With over 2.5 million implants performed worldwide, STAAR Surgical (NASDAQ: STAA) designs and manufactures implantable lenses that correct vision problems without removing the eye's natural lens.
Why Do We Pass on STAA?
- Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
- Free cash flow margin dropped by 26.6 percentage points over the last five years, implying the company became more capital intensive as competition picked up
- Eroding returns on capital suggest its historical profit centers are aging
At $17.81 per share, STAAR Surgical trades at 3.1x forward price-to-sales. If you’re considering STAA for your portfolio, see our FREE research report to learn more.
Amphastar Pharmaceuticals (AMPH)
Market Cap: $1.05 billion
Founded in 1996 and known for its expertise in complex drug formulations, Amphastar Pharmaceuticals (NASDAQ: AMPH) develops and manufactures technically challenging injectable and inhalation medications, including both generic and proprietary pharmaceutical products.
Why Does AMPH Worry Us?
- Modest revenue base of $730.7 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Projected sales are flat for the next 12 months, implying demand will slow from its two-year trend
Amphastar Pharmaceuticals is trading at $22.21 per share, or 6.7x forward P/E. Read our free research report to see why you should think twice about including AMPH in your portfolio.
One Healthcare Stock to Buy:
HCA Healthcare (HCA)
Market Cap: $91.01 billion
With roots dating back to 1968 and a network spanning 20 states, HCA Healthcare (NYSE: HCA) operates a network of 190 hospitals and 150+ outpatient facilities providing a full range of medical services across the US and England.
Why Do We Love HCA?
- Enormous revenue base of $71.59 billion gives it economies of scale and advantages over new entrants due to the industry’s regulatory complexity
- Share buybacks catapulted its annual earnings per share growth to 20.7%, which outperformed its revenue gains over the last five years
- Stellar returns on capital showcase management’s ability to surface highly profitable business ventures
HCA Healthcare’s stock price of $378.32 implies a valuation ratio of 14.6x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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