From novel pharmaceuticals to telemedicine, most healthcare companies are on a mission to drive better patient outcomes. 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 11.2%. This drawdown was much worse than the S&P 500’s 1.1% decline.

Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. With that said, here are three healthcare stocks boasting durable advantages.

Tenet Healthcare (THC)

Market Cap: $11.37 billion

With a network spanning nine states and serving primarily urban and suburban communities, Tenet Healthcare (NYSE:THC) operates a nationwide network of hospitals, ambulatory surgery centers, and outpatient facilities providing acute care and specialty healthcare services.

Why Do We Like THC?

1. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 34.7% exceeded its revenue gains over the last five years
2. Market-beating returns on capital illustrate that management has a knack for investing in profitable ventures, and its returns are growing as it capitalizes on even better market opportunities
3. Rising returns on capital show management is finding more attractive investment opportunities

Tenet Healthcare is trading at $120.01 per share, or 10.8x forward price-to-earnings. Is now the right time to buy? Find out in our full research report, it’s free.

Option Care Health (OPCH)

Market Cap: $5.33 billion

With a nationwide network of 177 locations serving 43 states and a team of over 4,500 clinicians, Option Care Health (NASDAQ:OPCH) is the largest independent provider of home and alternate site infusion services, delivering medications and clinical support to patients across the United States.

Why Does OPCH Stand Out?

1. Impressive 16.7% annual revenue growth over the last five years indicates it’s winning market share this cycle
2. Share repurchases over the last five years enabled its annual earnings per share growth of 75.4% to outpace its revenue gains
3. Free cash flow margin grew by 2.4 percentage points over the last five years, giving the company more chips to play with

At $32.78 per share, Option Care Health trades at 25.6x forward price-to-earnings. Is now a good time to buy? See for yourself in our in-depth research report, it’s free.

Eli Lilly (LLY)

Market Cap: $720 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 Are We Backing LLY?

1. Annual revenue growth of 25.6% over the past two years was outstanding, reflecting market share gains this cycle
2. Share repurchases over the last five years enabled its annual earnings per share growth of 17.7% to outpace its revenue gains
3. Stellar returns on capital showcase management’s ability to surface highly profitable business ventures

Eli Lilly’s stock price of $807.99 implies a valuation ratio of 33.2x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.

Stocks We Like Even More

With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.

Put yourself in the driver’s seat by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Axon (+711% five-year return). Find your next big winner with StockStory today for free.