Personal health and wellness is one of the many secular tailwinds for healthcare companies. But speed bumps such as inventory destockings have persisted in the wake of COVID-19, and over the past six months, the industry has pulled back by 12.9%. This drop was much worse than the S&P 500’s 1.9% loss.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. With that said, here is one healthcare stock boasting a durable advantage and two we’re swiping left on.
Two HealthcareStocks to Sell:
Gilead Sciences (GILD)
Market Cap: $135.5 billion
From its groundbreaking work in developing the first single-tablet regimens for HIV treatment, Gilead Sciences (NASDAQ: GILD) develops and markets innovative medicines for life-threatening diseases including HIV, viral hepatitis, COVID-19, and cancer.
Why Does GILD Fall Short?
- Annual sales growth of 3.1% 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
- Waning returns on capital imply its previous profit engines are losing steam
Gilead Sciences is trading at $108 per share, or 13.3x forward P/E. To fully understand why you should be careful with GILD, check out our full research report (it’s free).
Waters Corporation (WAT)
Market Cap: $20.45 billion
Founded in 1958 and pioneering innovations in laboratory analysis for over six decades, Waters (NYSE: WAT) develops and manufactures analytical instruments, software, and consumables for liquid chromatography, mass spectrometry, and thermal analysis used in scientific research and quality testing.
Why Does WAT Worry Us?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Absence of organic revenue growth over the past two years suggests it may have to lean into acquisitions to drive its expansion
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $343.68 per share, Waters Corporation trades at 26x forward P/E. Check out our free in-depth research report to learn more about why WAT doesn’t pass our bar.
One Healthcare Stock to Buy:
Hims & Hers Health (HIMS)
Market Cap: $12.71 billion
Originally launched with a focus on stigmatized conditions like hair loss and sexual health, Hims & Hers Health (NYSE: HIMS) operates a consumer-focused telehealth platform that connects patients with healthcare providers for prescriptions and wellness products.
Why Are We Bullish on HIMS?
- Customer growth averaged 48.6% over the past two years, showing its ability to "land" new contracts and potentially "expand" them later - a powerful one-two punch for sales
- Earnings per share have massively outperformed its peers over the last four years, increasing by 37% annually
- Free cash flow margin increased by 23.5 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Hims & Hers Health’s stock price of $56.70 implies a valuation ratio of 42.9x forward EV-to-EBITDA. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 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 for free.
