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 13%. This drawdown was worse than the S&P 500’s 5.5% decline.

The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. With that said, here is one resilient healthcare stock at the top of our wish list and two we’re passing on.

Two Healthcare Stocks to Sell:

Artivion (AORT)

Market Cap: $1.23 billion

Formerly known as CryoLife until its 2022 rebranding, Artivion (NYSE: AORT) develops and manufactures medical devices and preserves human tissues used in cardiac and vascular surgical procedures for patients with aortic disease.

Why Do We Think Twice About AORT?

1. 7.2% annual revenue growth over the last five years was slower than its healthcare peers
2. Revenue base of $390.1 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
3. Low returns on capital reflect management’s struggle to allocate funds effectively

At $28.91 per share, Artivion trades at 43x forward P/E. Read our free research report to see why you should think twice about including AORT in your portfolio.

The Pennant Group (PNTG)

Market Cap: $985.1 million

Spun off from The Ensign Group in 2019 to focus on non-skilled nursing healthcare services, Pennant Group (NASDAQ: PNTG) operates home health, hospice, and senior living facilities across 13 western and midwestern states, serving patients of all ages including seniors.

Why Are We Hesitant About PNTG?

1. Revenue base of $748.2 million puts it at a disadvantage compared to larger competitors exhibiting economies of scale
2. Free cash flow margin dropped by 5.1 percentage points over the last five years, implying the company became more capital intensive as competition picked up
3. 6× net-debt-to-EBITDA ratio makes lenders less willing to extend additional capital, potentially necessitating dilutive equity offerings

The Pennant Group’s stock price of $28.58 implies a valuation ratio of 25.2x forward P/E. If you’re considering PNTG for your portfolio, see our FREE research report to learn more.

One Healthcare Stock to Buy:

DexCom (DXCM)

Market Cap: $33.2 billion

Founded in 1999 and receiving its first FDA approval in 2006, DexCom (NASDAQ: DXCM) develops and sells continuous glucose monitoring systems that allow people with diabetes to track their blood sugar levels without repeated finger pricks.

Why Will DXCM Outperform?

1. Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 19.2% over the past two years
2. Incremental sales significantly boosted profitability as its annual earnings per share growth of 23% over the last five years outstripped its revenue performance
3. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures

DexCom is trading at $84.20 per share, or 39.5x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.

Stocks We Like Even More

The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.

While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out 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 176% over the last five years.

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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today for free.