Personal health and wellness is one of the many secular tailwinds for healthcare companies. Those leading the charge have realized strong financial performance, and over the past six months, the industry’s 13.5% return has closely followed 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. With that said, here is one resilient healthcare stock at the top of our wish list and two best left ignored.
Two Healthcare Stocks to Sell:
Exact Sciences (EXAS)
Market Cap: $19.21 billion
With a mission to detect cancer earlier when it's more treatable, Exact Sciences (NASDAQ:EXAS) develops and markets cancer screening and diagnostic tests, including its flagship Cologuard stool-based colorectal cancer screening test.
Why Does EXAS Fall Short?
- Cash-burning history makes us doubt the long-term viability of its business model
- Negative returns on capital show management lost money while trying to expand the business
At $101.23 per share, Exact Sciences trades at 120.1x forward P/E. Check out our free in-depth research report to learn more about why EXAS doesn’t pass our bar.
Align Technology (ALGN)
Market Cap: $11.81 billion
Pioneering an alternative to traditional metal braces with nearly invisible plastic aligners, Align Technology (NASDAQ:ALGN) designs and manufactures Invisalign clear aligners, iTero intraoral scanners, and dental CAD/CAM software for orthodontic and restorative treatments.
Why Does ALGN Give Us Pause?
- Weak clear aligner shipments over the past two years imply it may need to invest in improvements to get back on track
- Capital intensity has ramped up over the last five years as its free cash flow margin decreased by 9.5 percentage points
- Waning returns on capital imply its previous profit engines are losing steam
Align Technology’s stock price of $164.19 implies a valuation ratio of 14.7x forward P/E. Dive into our free research report to see why there are better opportunities than ALGN.
One Healthcare Stock to Buy:
Alignment Healthcare (ALHC)
Market Cap: $3.78 billion
Founded in 2013 with a mission to transform healthcare for seniors, Alignment Healthcare (NASDAQ:ALHC) provides Medicare Advantage health plans for seniors with features like concierge services, transportation benefits, and technology-driven care coordination.
Why Will ALHC Beat the Market?
- Average customer growth of 41.2% over the past two years demonstrates success in acquiring new clients that could increase their spending in the future
- Earnings per share grew by 30.1% annually over the last four years, massively outpacing its peers
- Free cash flow profile has moved into positive territory over the last five years, showing the company has crossed a key inflection point
Alignment Healthcare is trading at $18.83 per share, or 96.1x forward P/E. Is now a good time to buy? Find out 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-small-cap company Comfort Systems (+782% 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
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