Healthcare companies are pushing the status quo by innovating in areas like drug development and digital health. But speed bumps such as inventory destockings have persisted in the wake of COVID-19, limiting growth. This has capped returns as the industry’s six-month gain of 6.5% has lagged the S&P 500’s 24.7% climb.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. On that note, here are two resilient healthcare stocks at the top of our wish list and one we’re passing on.
One Healthcare Stock to Sell:
iRhythm (IRTC)
Market Cap: $5.58 billion
Pioneering the shift from bulky, short-term heart monitors to sleek, wire-free patches, iRhythm Technologies (NASDAQ:IRTC) provides wearable cardiac monitoring devices and AI-powered analysis services that help physicians detect and diagnose heart rhythm disorders.
Why Do We Think Twice About IRTC?
- Smaller revenue base of $657.2 million means it hasn’t achieved the economies of scale that some industry juggernauts enjoy
- Cash-burning history makes us doubt the long-term viability of its business model
iRhythm’s stock price of $173.81 implies a valuation ratio of 80.4x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including IRTC in your portfolio.
Two Healthcare Stocks to Watch:
AbbVie (ABBV)
Market Cap: $417.9 billion
Born from a 2013 spinoff of Abbott Laboratories' pharmaceutical business, AbbVie (NYSE:ABBV) is a biopharmaceutical company that develops and markets medications for autoimmune diseases, cancer, neurological disorders, and other complex health conditions.
Why Do We Like ABBV?
- Unparalleled scale of $58.33 billion in revenue gives it negotiating leverage and staying power in an industry with high barriers to entry
- Robust free cash flow margin of 36.6% gives it many options for capital deployment
- ROIC punches in at 17.9%, illustrating management’s expertise in identifying profitable investments
At $237.73 per share, AbbVie trades at 17.9x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
UnitedHealth (UNH)
Market Cap: $320.4 billion
With over 100 million people served across its various businesses and a workforce of more than 400,000, UnitedHealth Group (NYSE:UNH) operates a health insurance business and Optum, a healthcare services division that provides everything from pharmacy benefits to primary care.
Why Should You Buy UNH?
- Dominant market position is represented by its $422.8 billion in revenue, which gives it negotiating power over membership pricing and reimbursement rates
- Sales outlook for the upcoming 12 months implies the business will stay on its desirable two-year growth trajectory
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
UnitedHealth is trading at $353.28 per share, or 16.4x 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
Donald Trump’s April 2025 "Liberation Day" tariffs sent markets into a tailspin, but stocks have since rebounded strongly, proving that knee-jerk reactions often create the best buying opportunities.
The smart money is already positioning for the next leg up. Don’t miss out on the recovery - check out our Top 5 Strong Momentum Stocks for this week. 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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
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