From novel pharmaceuticals to telemedicine, most healthcare companies are on a mission to drive better patient outcomes. Players catalyzing medical advancements have benefited from elevated demand, and their momentum is only rising as the industry has posted a 12.4% gain over the past six months, beating the S&P 500 by 5.6 percentage points.
Although these businesses have produced results, only a handful will thrive over the long term as the influx of venture capital has ushered in a new wave of competition. With that said, here are two healthcare stocks we think can generate sustainable market-beating returns and one that may face trouble.
One Healthcare Stock to Sell:
CVS Health (CVS)
Market Cap: $128.2 billion
With over 9,000 retail pharmacy locations serving as neighborhood health destinations across America, CVS Health (NYSE: CVS) operates retail pharmacies, provides pharmacy benefit management services, and offers health insurance through its Aetna subsidiary.
Why Does CVS Worry Us?
- Annual sales growth of 6.3% over the last two years lagged behind its healthcare peers as its large revenue base made it difficult to generate incremental demand
- Demand is forecasted to shrink as its estimated sales for the next 12 months are flat
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 1.5% annually while its revenue grew
At $104.38 per share, CVS Health trades at 13.7x forward P/E. Dive into our free research report to see why there are better opportunities than CVS.
Two Healthcare Stocks to Watch:
Humana (HUM)
Market Cap: $44.27 billion
With over 80% of its revenue derived from federal government contracts, Humana (NYSE: HUM) provides health insurance plans and healthcare services to approximately 17 million members, with a strong focus on Medicare Advantage plans for seniors.
Why Will HUM Beat the Market?
- Annual revenue growth of 13.6% over the last two years beat the sector average and underscores the unique value of its offerings
- Dominant market position is represented by its $137.3 billion in revenue, which gives it negotiating power over membership pricing and reimbursement rates
- Projected revenue growth of 19.4% for the next 12 months is above its two-year trend, pointing to accelerating demand
Humana’s stock price of $382.78 implies a valuation ratio of 35.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Molina Healthcare (MOH)
Market Cap: $10.06 billion
Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE: MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states.
Why Do We Watch MOH?
- Annual revenue growth of 16.2% over the last five years beat the sector average and underscores the unique value of its offerings
- Large revenue base of $45.08 billion gives it power over healthcare providers and plan holders
Molina Healthcare is trading at $227.31 per share, or 37.3x 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
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 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.
