Healthcare companies are pushing the status quo by innovating in areas like drug development and digital health. Despite the rosy long-term prospects, short-term headwinds such as COVID inventory destocking have harmed the industry’s returns - over the past six months, healthcare stocks have collectively shed 10.9%. This performance was worse than the S&P 500’s 5.6% decline.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. On that note, here are two resilient healthcare stocks at the top of our wish list and one we’re steering clear of.

One Healthcare Stock to Sell:

Clover Health (CLOV)

Market Cap: $1.77 billion

Founded in 2014 to improve healthcare for America's seniors through technology, Clover Health (NASDAQ: CLOV) provides Medicare Advantage plans for seniors with a focus on affordable care and uses its proprietary Clover Assistant software to help physicians manage patient care.

Why Are We Hesitant About CLOV?

1. Sales tumbled by 37.2% annually over the last two years, showing market trends are working against its favor during this cycle
2. Weak customer trends over the past two years suggest it may need to improve its products, pricing, or go-to-market strategy
3. Cash-burning tendencies make us wonder if it can sustainably generate shareholder value

Clover Health’s stock price of $3.45 implies a valuation ratio of 38.6x forward EV-to-EBITDA. If you’re considering CLOV for your portfolio, see our FREE research report to learn more.

Two Healthcare Stocks to Watch:

Natera (NTRA)

Market Cap: $20.68 billion

Founded in 2003 as Gene Security Network before rebranding in 2012, Natera (NASDAQ: NTRA) develops and commercializes genetic tests for prenatal screening, cancer detection, and organ transplant monitoring using its proprietary cell-free DNA technology.

Why Should You Buy NTRA?

1. Average unit sales growth of 24.2% over the past two years reflects steady demand for its products
2. Earnings growth has trumped its peers over the last five years as its EPS has compounded at 20.5% annually
3. Free cash flow profile has moved into positive territory over the last five years, showing the company has crossed a key inflection point

Natera is trading at $153.09 per share, or 10.5x forward price-to-sales. Is now the right time to buy? Find out in our full research report, it’s free.

Amphastar Pharmaceuticals (AMPH)

Market Cap: $1.16 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 Are We Fans of AMPH?

1. Annual revenue growth of 21.1% over the last two years was superb and indicates its market share increased during this cycle
2. Free cash flow margin jumped by 16.9 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
3. Returns on capital are climbing as management makes more lucrative bets

At $24.41 per share, Amphastar Pharmaceuticals trades at 6.5x forward price-to-earnings. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More

Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.

While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 6 Stocks for this week. 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 Axon (+711% five-year return). Find your next big winner with StockStory today for free.