Healthcare companies are pushing the status quo by innovating in areas like drug development and digital health. 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 6.3%. This performance is a noticeable divergence from the S&P 500’s 5.1% return.
While some businesses have durable competitive advantages that enable them to grow consistently, the odds aren’t great for the ones we’re analyzing today. Taking that into account, here are three healthcare stocks we’re steering clear of.
Market Cap: $1.78 billion
Founded in 1992, Omnicell (NASDAQ:OMCL) provides automation solutions for pharmacies and healthcare providers, with a focus on improving medication management, operational efficiency, and patient safety.
Why Do We Think OMCL Will Underperform?
Omnicell is trading at $39.87 per share, or 21.4x forward price-to-earnings. If you’re considering OMCL for your portfolio, see our FREE research report to learn more.
Market Cap: $1.26 billion
Founded in 2001, NeoGenomics (NASDAQ:NEO) provides genetic and molecular testing services to support cancer diagnosis and treatment decisions, specializing in clinical testing, molecular oncology, and pharmacogenomics (impact of genes on drugs and vice versa).
Why Should You Sell NEO?
NeoGenomics’s stock price of $9.82 implies a valuation ratio of 48.8x forward price-to-earnings. Check out our free in-depth research report to learn more about why NEO doesn’t pass our bar.
Market Cap: $2.38 billion
Founded in 1996, Select Medical (NYSE:SEM) operates critical illness recovery hospitals, rehabilitation hospitals, outpatient rehabilitation clinics, and occupational health centers across the US.
Why Does SEM Fall Short?
At $18.65 per share, Select Medical trades at 16x forward price-to-earnings. To fully understand why you should be careful with SEM, check out our full research report (it’s free).
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 5 Growth Stocks for this month. 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.
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