Healthcare companies are pushing the status quo by innovating in areas like drug development and digital health. Shareholders who bet on the industry have outperformed the market lately as the 1.1% drawdown for healthcare stocks over the past six months was relatively better than the S&P 500’s 2.8% decline.
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. On that note, here is one resilient healthcare stock at the top of our wish list and two we’re swiping left on.
Two Healthcare Stocks to Sell:
Guardant Health (GH)
Market Cap: $11.96 billion
Pioneering the field of "liquid biopsy" with technology that can identify cancer-specific genetic mutations from a simple blood draw, Guardant Health (NASDAQ: GH) develops blood tests that detect and monitor cancer by analyzing tumor DNA in the bloodstream, helping doctors make treatment decisions without invasive biopsies.
Why Do We Think Twice About GH?
- Subscale operations are evident in its revenue base of $982 million, meaning it has fewer distribution channels than its larger rivals (but more room for growth)
- Cash-burning history makes us doubt the long-term viability of its business model
- Negative EBITDA restricts its access to capital and increases the probability of shareholder dilution if things turn unexpectedly
Guardant Health’s stock price of $90.50 implies a valuation ratio of 9.3x forward price-to-sales. Check out our free in-depth research report to learn more about why GH doesn’t pass our bar.
Ocular Therapeutix (OCUL)
Market Cap: $1.81 billion
Pioneering a drug delivery platform that can eliminate the need for monthly eye injections, Ocular Therapeutix (NASDAQ: OCUL) develops sustained-release treatments for eye diseases using its proprietary ELUTYX bioresorbable hydrogel technology that gradually releases medication.
Why Is OCUL Risky?
- Sales tumbled by 5.7% annually over the last two years, showing market trends are working against its favor during this cycle
- Efficiency has decreased over the last five years as its adjusted operating margin fell significantly
- Free cash flow margin dropped by 264.1 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $8.34 per share, Ocular Therapeutix trades at 34x forward price-to-sales. If you’re considering OCUL for your portfolio, see our FREE research report to learn more.
One Healthcare Stock to Watch:
Vertex Pharmaceuticals (VRTX)
Market Cap: $113.6 billion
Founded in 1989 with a mission to create medicines that treat the underlying causes of disease rather than just symptoms, Vertex Pharmaceuticals (NASDAQ: VRTX) develops and markets transformative medicines for serious diseases, with a focus on cystic fibrosis, sickle cell disease, and pain management.
Why Do We Watch VRTX?
- Solid 14.1% annual revenue growth over the last five years indicates its offering’s solve complex business issues
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends
- ROIC punches in at 40.4%, illustrating management’s expertise in identifying profitable investments
Vertex Pharmaceuticals is trading at $447.60 per share, or 23.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
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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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
