Personal health and wellness is one of the many secular tailwinds for healthcare companies. Players catalyzing medical advancements have benefited from elevated demand, and their momentum is only rising as the industry has posted a 9.3% gain over the past six months, beating the S&P 500 by 2 percentage points.
Nevertheless, investors should tread carefully as the sector is heavily regulated, and businesses can be negatively impacted if the rules change. With that said, here is one resilient healthcare stock at the top of our wish list and two best left ignored.
Two Healthcare Stocks to Sell:
Regeneron (REGN)
Market Cap: $80.42 billion
Founded by scientists who wanted to build a company where science could thrive, Regeneron Pharmaceuticals (NASDAQ:REGN) develops and commercializes medicines for serious diseases, with key products treating eye conditions, allergic diseases, cancer, and other disorders.
Why Do We Think Twice About REGN?
- Annual sales growth of 4.6% over the last two years lagged behind its healthcare peers as its large revenue base made it difficult to generate incremental demand
- Expenses have increased as a percentage of revenue over the last five years as its adjusted operating margin fell by 26.8 percentage points
- Eroding returns on capital suggest its historical profit centers are aging
Regeneron’s stock price of $784.40 implies a valuation ratio of 17.3x forward P/E. To fully understand why you should be careful with REGN, check out our full research report (it’s free).
Illumina (ILMN)
Market Cap: $17.49 billion
Pioneering the ability to read the human genome at unprecedented speed and affordability, Illumina (NASDAQ:ILMN) develops and sells advanced DNA sequencing and microarray technologies that allow researchers and clinicians to analyze genetic variations and functions.
Why Does ILMN Worry Us?
- Core business is underperforming as its organic revenue has disappointed over the past two years, suggesting it might need acquisitions to stimulate growth
- Performance over the past five years was negatively impacted by new share issuances as its earnings per share grew slower than its revenue
- ROIC of 0.2% reflects management’s challenges in identifying attractive investment opportunities
Illumina is trading at $114.55 per share, or 22.7x forward P/E. Dive into our free research report to see why there are better opportunities than ILMN.
One Healthcare Stock to Watch:
Molina Healthcare (MOH)
Market Cap: $6.53 billion
Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE:MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states.
Why Are We Positive On MOH?
- Market share has increased this cycle as its 18.7% annual revenue growth over the last five years was exceptional
- Large revenue base of $45.43 billion gives it power over healthcare providers and plan holders
At $126.16 per share, Molina Healthcare trades at 15.9x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in 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 244% over the last five years (as of June 30, 2025).
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-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.