Healthcare companies are pushing the status quo by innovating in areas like drug development and digital health. Shareholders who bet on the industry have been rewarded lately as healthcare stocks have returned 31.6% over the past six months, topping the S&P 500 by 17.9 percentage points.
Regardless of these results, investors must exercise caution as many businesses in this space are subject to heavy regulation that can influence their earnings potential. Keeping that in mind, here are two healthcare stocks we think can generate sustainable market-beating returns and one that may face trouble.
One Healthcare Stock to Sell:
Corcept (CORT)
Market Cap: $11.98 billion
Focusing on the powerful stress hormone that affects everything from metabolism to immune function, Corcept Therapeutics (NASDAQ: CORT) develops and markets medications that modulate cortisol to treat endocrine disorders, cancer, and neurological diseases.
Why Does CORT Give Us Pause?
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 16.1% annually while its revenue grew
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 25.7 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
Corcept is trading at $110.22 per share, or 25x forward P/E. Dive into our free research report to see why there are better opportunities than CORT.
Two Healthcare Stocks to Watch:
Stryker (SYK)
Market Cap: $108 billion
With over 150 million patients impacted annually through its innovative healthcare technologies, Stryker (NYSE: SYK) develops and manufactures advanced medical devices and equipment across orthopedics, surgical tools, neurotechnology, and patient care solutions.
Why Do We Like SYK?
- Average organic revenue growth of 9.2% over the past two years demonstrates its ability to expand independently without relying on acquisitions
- Revenue base of $25.84 billion gives it economies of scale and some negotiating power
- Free cash flow margin jumped by 6.5 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $281.50 per share, Stryker trades at 17.6x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free.
Alignment Healthcare (ALHC)
Market Cap: $2.15 billion
Founded in 2013 with a mission to transform healthcare for seniors, Alignment Healthcare (NASDAQ: ALHC) provides Medicare Advantage health plans for seniors with features like concierge services, transportation benefits, and technology-driven care coordination.
Why Do We Love ALHC?
- Impressive 43.2% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Incremental sales over the last five years have been highly profitable as its earnings per share increased by 47.9% annually, topping its revenue gains
- Free cash flow margin increased by 6.8 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Alignment Healthcare’s stock price of $10.34 implies a valuation ratio of 20.9x forward P/E. Is now the time to initiate a position? See for yourself in our full 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 (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.
