Personal health and wellness is one of the many secular tailwinds for healthcare companies. Players catalyzing medical advancements have benefited from elevated demand, which has supported the industry’s returns lately - over the past six months, healthcare stocks have gained 13.5%, nearly mirrorring 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 poised to generate sustainable market-beating returns and two we’re swiping left on.
Two Healthcare Stocks to Sell:
Omnicell (OMCL)
Market Cap: $1.82 billion
Driven by the vision of an "Autonomous Pharmacy" with zero medication errors, Omnicell (NASDAQ:OMCL) provides medication management automation and adherence tools that help healthcare systems and pharmacies reduce errors and improve efficiency.
Why Is OMCL Risky?
- Flat sales over the last two years suggest it must find different ways to grow during this cycle
- Efficiency has decreased over the last five years as its adjusted operating margin fell by 9.5 percentage points
- Incremental sales over the last five years were much less profitable as its earnings per share fell by 5.4% annually while its revenue grew
Omnicell’s stock price of $40.49 implies a valuation ratio of 22.5x forward P/E. Read our free research report to see why you should think twice about including OMCL in your portfolio.
Labcorp (LH)
Market Cap: $21.42 billion
With over 600 million tests performed annually and involvement in 90% of FDA-approved drugs in 2023, Labcorp (NYSE:LH) provides laboratory testing services and drug development solutions to doctors, hospitals, pharmaceutical companies, and patients worldwide.
Why Are We Hesitant About LH?
- Organic sales performance over the past two years indicates the company may need to make strategic adjustments or rely on M&A to catalyze faster growth
- Costs have risen faster than its revenue over the last five years, causing its adjusted operating margin to decline by 12.3 percentage points
- Diminishing returns on capital suggest its earlier profit pools are drying up
At $258.38 per share, Labcorp trades at 15.2x forward P/E. Check out our free in-depth research report to learn more about why LH doesn’t pass our bar.
One Healthcare Stock to Buy:
McKesson (MCK)
Market Cap: $99.81 billion
With roots dating back to 1833, making it one of America's oldest continuously operating businesses, McKesson (NYSE:MCK) is a healthcare services company that distributes pharmaceuticals, medical supplies, and provides technology solutions to pharmacies, hospitals, and healthcare providers.
Why Should You Buy MCK?
- Offerings and unique value proposition resonate with customers, as seen in its above-market 15.3% annual sales growth over the last two years
- Unparalleled scale of $387.1 billion in revenue gives it negotiating leverage and staying power in an industry with high barriers to entry
- Share repurchases have amplified shareholder returns as its annual earnings per share growth of 18.3% exceeded its revenue gains over the last five years
McKesson is trading at $808.02 per share, or 19.8x forward P/E. Is now the time to initiate a position? See for yourself 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 (+1,326% 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 for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.