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 2.2%. This drawdown mirrored the S&P 500’s decline.
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 is one healthcare stock poised to generate sustainable market-beating returns and two we’re swiping left on.
Two Healthcare Stocks to Sell:
QuidelOrtho (QDEL)
Market Cap: $1.17 billion
Born from the 2022 merger of Quidel and Ortho Clinical Diagnostics, QuidelOrtho (NASDAQ: QDEL) develops and manufactures diagnostic testing solutions for healthcare providers, from rapid point-of-care tests to complex laboratory instruments and systems.
Why Do We Steer Clear of QDEL?
- Underwhelming constant currency revenue performance over the past two years suggests its product offering at current prices doesn’t resonate with customers
- Free cash flow margin shrank by 21.9 percentage points over the last five years, suggesting the company is consuming more capital to stay competitive
- Eroding returns on capital suggest its historical profit centers are aging
QuidelOrtho is trading at $17.25 per share, or 7.6x forward P/E. Dive into our free research report to see why there are better opportunities than QDEL.
Artivion (AORT)
Market Cap: $1.64 billion
Formerly known as CryoLife until its 2022 rebranding, Artivion (NYSE: AORT) develops and manufactures medical devices and preserves human tissues used in cardiac and vascular surgical procedures for patients with aortic disease.
Why Is AORT Not Exciting?
- Modest revenue base of $441.3 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Ability to fund investments or reward shareholders with increased buybacks or dividends is restricted by its weak free cash flow margin of -0.6% for the last five years
- Underwhelming 2.6% return on capital reflects management’s difficulties in finding profitable growth opportunities
At $34.20 per share, Artivion trades at 42.2x forward P/E. Check out our free in-depth research report to learn more about why AORT doesn’t pass our bar.
One Healthcare Stock to Watch:
Abbott Laboratories (ABT)
Market Cap: $179.2 billion
With roots dating back to 1888 when founder Dr. Wallace Abbott began producing precise, dosage-form medications, Abbott Laboratories (NYSE: ABT) develops and sells a diverse range of healthcare products including medical devices, diagnostics, nutrition products, and branded generic pharmaceuticals.
Why Are We Fans of ABT?
- Large revenue base of $44.33 billion gives it negotiating leverage and staying power in an industry with high barriers to entry
- Robust free cash flow margin of 16.5% gives it many options for capital deployment
- ROIC punches in at 13.2%, illustrating management’s expertise in identifying profitable investments
Abbott Laboratories’s stock price of $103.04 implies a valuation ratio of 18.6x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
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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.
