Personal health and wellness is one of the many secular tailwinds for healthcare companies. Despite the rosy long-term prospects, short-term headwinds such as COVID inventory destocking have caused the industry to lag recently - over the past six months, the collective 10.9% gain for healthcare stocks has fallen short of the S&P 500’s 16.4% rise.
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. 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:
LifeStance Health Group (LFST)
Market Cap: $2.51 billion
With over 6,600 licensed mental health professionals treating more than 880,000 patients annually, LifeStance Health (NASDAQ: LFST) provides outpatient mental health services through a network of clinicians offering psychiatric evaluations, psychological testing, and therapy across 33 states.
Why Does LFST Give Us Pause?
- Modest revenue base of $1.37 billion gives it less fixed cost leverage and fewer distribution channels than larger companies
- Poor free cash flow margin of -0.5% for the last five years limits its freedom to invest in growth initiatives, execute share buybacks, or pay dividends
- Negative returns on capital show that some of its growth strategies have backfired
LifeStance Health Group’s stock price of $6.37 implies a valuation ratio of 29x forward P/E. To fully understand why you should be careful with LFST, check out our full research report (it’s free for active Edge members).
Two Healthcare Stocks to Watch:
Cigna (CI)
Market Cap: $72.29 billion
With roots dating back to 1792 and serving millions of customers across the globe, The Cigna Group (NYSE: CI) provides healthcare services through its Evernorth Health Services and Cigna Healthcare segments, offering pharmacy benefits, specialty care, and medical plans.
Why Could CI Be a Winner?
- Annual revenue growth of 18.8% over the past two years was outstanding, reflecting market share gains this cycle
- Unparalleled scale of $268 billion in revenue enables it to spread administrative costs across a larger membership base
- Earnings per share grew by 8.1% annually over the last five years, above the peer group average
At $272.97 per share, Cigna trades at 8.7x forward P/E. Is now a good time to buy? See for yourself in our in-depth research report, it’s free for active Edge members.
Zoetis (ZTS)
Market Cap: $53.43 billion
Originally spun off from Pfizer in 2013 as the world's largest pure-play animal health company, Zoetis (NYSE: ZTS) discovers, develops, and sells medicines, vaccines, diagnostic products, and services for pets and livestock animals worldwide.
Why Do We Like ZTS?
- Share repurchases over the last five years enabled its annual earnings per share growth of 10.5% to outpace its revenue gains
- Strong free cash flow margin of 21.4% enables it to reinvest or return capital consistently
- ROIC punches in at 29.2%, illustrating management’s expertise in identifying profitable investments
Zoetis is trading at $121.99 per share, or 18.1x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free for active Edge members.
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 (+1,545% between March 2020 and March 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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