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, which has supported the industry’s returns lately - over the past six months, healthcare stocks have gained 14.1%, nearly mirrorring the S&P 500.
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 resilient healthcare stocks at the top of our wish list and one that may face trouble.
One Healthcare Stock to Sell:
Centene (CNC)
Market Cap: $19.89 billion
Serving nearly 1 in 15 Americans through its government healthcare programs, Centene (NYSE:CNC) is a healthcare company that manages government-sponsored health insurance programs like Medicaid and Medicare for low-income and complex-needs populations.
Why Are We Hesitant About CNC?
- Underwhelming customer growth over the past two years shows the company faced challenges in winning new contracts
- Earnings per share fell by 5.1% annually over the last five years while its revenue grew, showing its incremental sales were much less profitable
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Centene’s stock price of $40.75 implies a valuation ratio of 15.9x forward P/E. Dive into our free research report to see why there are better opportunities than CNC.
Two Healthcare Stocks to Watch:
Humana (HUM)
Market Cap: $32.05 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 Are We Backing HUM?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 12.8% annual sales growth over the last two years
- Dominant market position is represented by its $126.3 billion in revenue, which gives it negotiating power over membership pricing and reimbursement rates
- Industry-leading 34.4% return on capital demonstrates management’s skill in finding high-return investments
At $265.29 per share, Humana trades at 18.7x forward P/E. Is now a good time to buy? Find out in our full research report, it’s free for active Edge members.
Tenet Healthcare (THC)
Market Cap: $17.38 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?
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 30.1% exceeded its revenue gains over the last five years
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are growing as it capitalizes on even better market opportunities
- Returns on capital are climbing as management makes more lucrative bets
Tenet Healthcare is trading at $197.62 per share, or 12.1x forward P/E. Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .
High-Quality Stocks for All Market Conditions
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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