Personal health and wellness is one of the many secular tailwinds for healthcare companies. But financial performance has lagged recently as players offloaded surplus COVID inventories in 2023 and 2024, a headwind for overall demand. The result? Over the past six months, the industry has tumbled by 13%. This drop was worse than the S&P 500’s 5.5% loss.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Taking that into account, here are three healthcare stocks boasting durable advantages.
Stryker (SYK)
Market Cap: $145.6 billion
With over 150 million patients impacted annually through its innovative healthcare technologies, Stryker (NYSE: SYK) develops and manufactures advanced medical devices and equipment across orthopedics, surgical tools, neurotechnology, and patient care solutions.
Why Is SYK Interesting?
- Existing business lines can expand without risky acquisitions as its organic revenue growth averaged 10.4% over the past two years
- Economies of scale give it some operating leverage when demand rises
- Solid free cash flow generation relative to most peers gives it a cushion and grants it various reinvestment opportunities
At $380.96 per share, Stryker trades at 27.6x forward P/E. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
Inspire Medical Systems (INSP)
Market Cap: $4.46 billion
Offering an alternative for the millions who struggle with traditional CPAP machines, Inspire Medical Systems (NYSE: INSP) develops and sells an implantable neurostimulation device that treats obstructive sleep apnea by stimulating nerves to keep airways open during sleep.
Why Are We Bullish on INSP?
- Measured rollout of new domestic medical centers communicates a gradual expansion strategy
- Earnings per share grew by 26.7% annually over the last five years, massively outpacing its peers
- Free cash flow margin jumped by 48.2 percentage points over the last five years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
Inspire Medical Systems is trading at $151.25 per share, or 55.1x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Eli Lilly (LLY)
Market Cap: $659.4 billion
Founded in 1876 by a Civil War veteran and pharmacist who was frustrated with the poor quality of medicines available at the time, Eli Lilly (NYSE: LLY) discovers, develops, and manufactures pharmaceutical products for conditions including diabetes, obesity, cancer, immunological disorders, and neurological diseases.
Why Will LLY Beat the Market?
- Impressive 33% annual revenue growth over the last two years indicates it’s winning market share this cycle
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 17.6% exceeded its revenue gains over the last five years
- Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures
Eli Lilly’s stock price of $736.58 implies a valuation ratio of 28.9x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like 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 176% over the last five years.
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.
