From novel pharmaceuticals to telemedicine, most healthcare companies are on a mission to drive better patient outcomes. 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 1.5%. This performance was similar to the S&P 500’s decline.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Taking that into account, here are two resilient healthcare stocks at the top of our wish list and one we’re passing on.
One Healthcare Stock to Sell:
Encompass Health (EHC)
Market Cap: $9.68 billion
With a network of 161 specialized facilities across 37 states and Puerto Rico, Encompass Health (NYSE: EHC) operates inpatient rehabilitation hospitals that help patients recover from strokes, hip fractures, and other debilitating conditions.
Why Does EHC Fall Short?
- Muted 5% annual revenue growth over the last five years shows its demand lagged behind its healthcare peers
- Disappointing comparable store sales over the past two years show customers aren’t responding well to its offerings and value proposition
At $97.39 per share, Encompass Health trades at 16.4x forward P/E. Read our free research report to see why you should think twice about including EHC in your portfolio.
Two Healthcare Stocks to Watch:
Tenet Healthcare (THC)
Market Cap: $16.36 billion
With a network spanning nine states and serving primarily urban and suburban communities, Tenet Healthcare (NYSE: THC) operates a nationwide network of hospitals, ambulatory surgery centers, and outpatient facilities providing acute care and specialty healthcare services.
Why Do We Like THC?
- Performance over the past five years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Free cash flow margin increased by 7.2 percentage points over the last five years, giving the company more capital to invest or return to shareholders
- Returns on capital are growing as management capitalizes on its market opportunities
Tenet Healthcare is trading at $188.17 per share, or 11x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Pfizer (PFE)
Market Cap: $161.1 billion
With roots dating back to 1849 when two German immigrants opened a fine chemicals business in Brooklyn, Pfizer (NYSE: PFE) is a global biopharmaceutical company that discovers, develops, manufactures, and sells medicines and vaccines for a wide range of diseases and conditions.
Why Could PFE Be a Winner?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 10.1% over the past two years
- Dominant market position is represented by its $62.58 billion in revenue, which creates significant barriers to entry in this highly regulated industry
- Adjusted operating profits and efficiency rose over the last two years as it benefited from some fixed cost leverage
Pfizer’s stock price of $28.30 implies a valuation ratio of 9.6x forward P/E. Is now a good time to buy? See for yourself in our comprehensive 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.
Our AI system flagged Palantir before it ran 1,662%. AppLovin before it ran 753%. Nvidia before it ran 1,178%. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
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 Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
