Healthcare companies are pushing the status quo by innovating in areas like drug development and digital health. Those leading the charge have not only realized strong financial performance but also propelled the broader industry’s returns as healthcare stocks have gained 25.7% over the past six months while the S&P 500 was up 13.6%.
Although these businesses have produced results, only a handful will thrive over the long term as the influx of venture capital has ushered in a new wave of competition. Keeping that in mind, here are two healthcare stocks boasting durable advantages and one best left ignored.
One Healthcare Stock to Sell:
Acadia Healthcare (ACHC)
Market Cap: $2.56 billion
With a network of over 250 facilities serving patients in 38 states and Puerto Rico, Acadia Healthcare (NASDAQ:ACHC) operates facilities providing mental health and substance use disorder treatment services across the United States.
Why Are We Bearish on ACHC?
- Weak admissions over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- Performance over the past five years shows its incremental sales were much less profitable, as its earnings per share fell by 12.4% annually
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
Acadia Healthcare is trading at $27.32 per share, or 16.9x forward P/E. Read our free research report to see why you should think twice about including ACHC in your portfolio.
Two Healthcare Stocks to Watch:
Boston Scientific (BSX)
Market Cap: $65.19 billion
Founded in 1979 with a mission to advance less-invasive medicine, Boston Scientific (NYSE:BSX) develops and manufactures medical devices used in minimally invasive procedures across cardiovascular, urological, neurological, and gastrointestinal specialties.
Why Do We Like BSX?
- Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 15.8% over the past two years
- Incremental sales significantly boosted profitability as its annual earnings per share growth of 18.6% over the last five years outstripped its revenue performance
- Free cash flow margin increased by 12.3 percentage points over the last five years, giving the company more capital to invest or return to shareholders
Boston Scientific’s stock price of $45.08 implies a valuation ratio of 14.5x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Medpace (MEDP)
Market Cap: $16.49 billion
Founded in 1992 as a scientifically-driven alternative to traditional contract research organizations, Medpace (NASDAQ:MEDP) provides outsourced clinical trial management and research services to help pharmaceutical, biotechnology, and medical device companies develop new treatments.
Why Is MEDP Interesting?
- Core business is healthy and doesn’t need acquisitions to boost sales as its organic revenue growth averaged 17.2% over the past two years
- Share repurchases over the last five years enabled its annual earnings per share growth of 29.6% to outpace its revenue gains
- Free cash flow margin jumped by 6 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
At $589.94 per share, Medpace trades at 32x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.