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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 6.7%. This drop was discouraging since the S&P 500 held steady.

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 resilient healthcare stock at the top of our wish list and two we’re steering clear of.

Two Healthcare Stocks to Sell:

Exact Sciences (EXAS)

Market Cap: $10.6 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 Are We Hesitant About EXAS?

1. Negative free cash flow raises questions about the return timeline for its investments

2. Negative returns on capital show that some of its growth strategies have backfired

3. 11× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly

Exact Sciences’s stock price of $56.64 implies a valuation ratio of 85.4x forward P/E. Read our free research report to see why you should think twice about including EXAS in your portfolio, it’s free.

CooperCompanies (COO)

Market Cap: $16.29 billion

With a history dating back to 1958 and a portfolio spanning two distinct healthcare segments, Cooper Companies (NASDAQ:COO) develops and manufactures medical devices focused on vision care through contact lenses and women's health including fertility products and services.

Why Does COO Worry Us?

1. Performance over the past five years was negatively impacted by new share issuances as its earnings per share grew slower than its revenue

2. ROIC of 4.9% reflects management’s challenges in identifying attractive investment opportunities

At $81.45 per share, CooperCompanies trades at 20x forward P/E. If you’re considering COO for your portfolio, see our FREE research report to learn more.

One Healthcare Stock to Watch:

Molina Healthcare (MOH)

Market Cap: $17.02 billion

Founded in 1980 as a provider for underserved communities in Southern California, Molina Healthcare (NYSE:MOH) provides managed healthcare services primarily to low-income individuals through Medicaid, Medicare, and Marketplace insurance programs across 21 states.

Why Do We Like MOH?

1. Annual revenue growth of 19.4% over the past five years was outstanding, reflecting market share gains this cycle

2. Scale advantages are evident in its $41.87 billion revenue base, which provides operating leverage when demand is strong

3. Earnings growth has trumped its peers over the last five years as its EPS has compounded at 14.6% annually