Healthcare companies are pushing the status quo by innovating in areas like drug development and digital health. But financial performance has lagged recently as players offloaded surplus COVID inventories in 2023 and 2024, a headwind for overall demand. The result? Over the past six months, the industry has tumbled by 11.1%. This drop was worse than the S&P 500’s 4% loss.

Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Taking that into account, here are two healthcare stocks boasting durable advantages and one we’re passing on.

One Healthcare Stock to Sell:

Enovis (ENOV)

Market Cap: $2.15 billion

With a focus on helping patients regain or maintain their natural motion, Enovis (NYSE: ENOV) develops and manufactures medical devices for orthopedic care, from injury prevention and pain management to joint replacement and rehabilitation.

Why Do We Steer Clear of ENOV?

1. Annual sales declines of 8.7% for the past five years show its products and services struggled to connect with the market during this cycle
2. Push for growth has led to negative returns on capital, signaling value destruction, and its falling returns suggest its earlier profit pools are drying up

Enovis is trading at $37.76 per share, or 12.1x forward price-to-earnings. To fully understand why you should be careful with ENOV, check out our full research report (it’s free).

Two Healthcare Stocks to Watch:

The Ensign Group (ENSG)

Market Cap: $7.34 billion

Founded in 1999 and named after a naval term for a flag-bearing ship, The Ensign Group (NASDAQ: ENSG) operates skilled nursing facilities, senior living communities, and rehabilitation services across 15 states, primarily serving high-acuity patients recovering from various medical conditions.

Why Do We Like ENSG?

1. Unit sales averaged 14.3% growth over the past two years and imply healthy demand for its products
2. Forecasted revenue growth of 14.3% for the next 12 months indicates its momentum over the last two years is sustainable
3. Earnings growth has massively outpaced its peers over the last five years as its EPS has compounded at 19.7% annually

At $128.74 per share, The Ensign Group trades at 20.9x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.

Astrana Health (ASTH)

Market Cap: $1.53 billion

Formerly known as Apollo Medical Holdings until early 2024, Astrana Health (NASDAQ: ASTH) operates a technology-powered healthcare platform that enables physicians to deliver coordinated care while successfully participating in value-based payment models.

Why Could ASTH Be a Winner?

1. Impressive 33.3% annual revenue growth over the last two years indicates it’s winning market share this cycle
2. Market share will likely rise over the next 12 months as its expected revenue growth of 31.5% is robust
3. Earnings per share have massively outperformed its peers over the last five years, increasing by 18.7% annually

Astrana Health’s stock price of $30.31 implies a valuation ratio of 7x forward EV-to-EBITDA. 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

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.