Personal health and wellness is one of the many secular tailwinds for healthcare companies. Shareholders who bet on the industry have seen decent returns lately as healthcare stocks were up 4.3% over the past six months, almost identical to the S&P 500.
Regardless of these results, investors must exercise caution as many businesses in this space are subject to heavy regulation that can influence their earnings potential. Keeping that in mind, here is one healthcare stock boasting a durable advantage and two best left ignored.
Two Healthcare Stocks to Sell:
Addus HomeCare (ADUS)
Market Cap: $1.69 billion
Serving approximately 66,000 clients across 22 states with a focus on "dual eligible" Medicare and Medicaid beneficiaries, Addus HomeCare (NASDAQ: ADUS) provides in-home personal care, hospice, and home health services to elderly, chronically ill, and disabled individuals.
Why Are We Hesitant About ADUS?
- Subscale operations are evident in its revenue base of $1.42 billion, meaning it has fewer distribution channels than its larger rivals
Addus HomeCare’s stock price of $93.32 implies a valuation ratio of 13.5x forward P/E. Dive into our free research report to see why there are better opportunities than ADUS.
Amphastar Pharmaceuticals (AMPH)
Market Cap: $983.6 million
Founded in 1996 and known for its expertise in complex drug formulations, Amphastar Pharmaceuticals (NASDAQ: AMPH) develops and manufactures technically challenging injectable and inhalation medications, including both generic and proprietary pharmaceutical products.
Why Is AMPH Not Exciting?
- Sales trends were unexciting over the last two years as its 5.4% annual growth was below the typical healthcare company
- Modest revenue base of $719.9 million gives it less fixed cost leverage and fewer distribution channels than larger companies
- Costs have risen faster than its revenue over the last two years, causing its adjusted operating margin to decline by 6.4 percentage points
At $21.68 per share, Amphastar Pharmaceuticals trades at 6.5x forward P/E. If you’re considering AMPH for your portfolio, see our FREE research report to learn more.
One Healthcare Stock to Buy:
Humana (HUM)
Market Cap: $23.82 billion
With over 80% of its revenue derived from federal government contracts, Humana (NYSE: HUM) provides health insurance plans and healthcare services to approximately 17 million members, with a strong focus on Medicare Advantage plans for seniors.
Why Do We Love HUM?
- 12.4% annual revenue growth over the last two years surpassed the sector average as its offerings resonated with customers
- Dominant market position is represented by its $129.8 billion in revenue, which gives it negotiating power over membership pricing and reimbursement rates
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Humana is trading at $198.95 per share, or 21.6x forward P/E. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More
ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.
Find out which 5 stocks it's flagging for this month — FREE. Get Our Top 5 Growth Stocks for Free HERE.
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-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
