Personal health and wellness is one of the many secular tailwinds for healthcare companies. But speed bumps such as inventory destockings have persisted in the wake of COVID-19, and over the past six months, the industry has pulled back by 9.3%. This drop is a stark contrast from the S&P 500’s 5.4% gain.
The elite companies can churn out earnings growth under any circumstance, however, and our mission at StockStory is to help you find them. On that note, here is one healthcare stock poised to generate sustainable market-beating returns and two we’re swiping left on.
Two Healthcare Stocks to Sell:
Acadia Healthcare (ACHC)
Market Cap: $1.88 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 Hesitant About ACHC?
- Disappointing admissions over the past two years show it’s struggled to increase its sales volumes and had to rely on price increases
- 24.8 percentage point decline in its free cash flow margin over the last five years reflects the company’s increased investments to defend its market position
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
Acadia Healthcare’s stock price of $20.40 implies a valuation ratio of 7.4x forward P/E. If you’re considering ACHC for your portfolio, see our FREE research report to learn more.
Fortrea (FTRE)
Market Cap: $663.7 million
Spun off from Labcorp in 2023 to focus exclusively on clinical research services, Fortrea (NASDAQ: FTRE) is a contract research organization that helps pharmaceutical, biotech, and medical device companies develop and bring their products to market through clinical trials and support services.
Why Is FTRE Risky?
- Sales tumbled by 3.6% annually over the last two years, showing market trends are working against its favor during this cycle
- Waning returns on capital from an already weak starting point displays the inefficacy of management’s past and current investment decisions
- Short cash runway increases the probability of a capital raise that dilutes existing shareholders
At $7.31 per share, Fortrea trades at 12.1x forward P/E. Dive into our free research report to see why there are better opportunities than FTRE.
One Healthcare Stock to Buy:
UnitedHealth (UNH)
Market Cap: $236.9 billion
With over 100 million people served across its various businesses and a workforce of more than 400,000, UnitedHealth Group (NYSE: UNH) operates a health insurance business and Optum, a healthcare services division that provides everything from pharmacy benefits to primary care.
Why Will UNH Outperform?
- Massive revenue base of $422.8 billion gives it meaningful leverage when negotiating reimbursement rates
- Projected revenue growth of 8.4% for the next 12 months suggests its momentum from the last two years will persist
- ROIC punches in at 20.5%, illustrating management’s expertise in identifying profitable investments
UnitedHealth is trading at $262.55 per share, or 12.2x forward P/E. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
When Trump unveiled his aggressive tariff plan in April 2025, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.
Don’t let fear keep you from great opportunities and take a look at Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
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. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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