The Future of Healthcare Stocks
After lagging behind broader equity markets in recent years, the healthcare sector may finally be set for a recovery that yields above-average returns. However, predicting this rebound is challenging. Regardless, there are several compelling healthcare stocks that investors might consider for long-term holding over the next five years.
Two Promising Stocks
Potential candidates include Intuitive Surgical (NASDAQ: ISRG) and Vertex Pharmaceuticals (NASDAQ: VRTX).
Intuitive Surgical’s Prospects
Intuitive Surgical faced some hurdles last year, such as high tariffs affecting its financial performance and increased competition in the robotic-assisted surgery (RAS) field, where it is a market leader. Although the company’s guidance for fiscal year 2026 fell short of market expectations, its long-term outlook remains robust due to its position in an underpenetrated RAS market and its development of leading surgical robots, including the well-known da Vinci system for minimally invasive surgeries.
Competitive Edge and Long-Term Potential
The company benefits from high switching costs; hospitals typically avoid replacing expensive devices. By the end of the last quarter, its installed base had grown to 11,106—up 12% year-over-year. As this number increases, so will the volume of procedures, a key growth driver for the medical device sector. This competitive advantage allows Intuitive Surgical to effectively navigate challenges such as tariffs by utilizing its strong pricing power.
Vertex Pharmaceuticals and Its Innovations
Vertex Pharmaceuticals is poised for growth with several upcoming catalysts that could elevate its stock price. Known for its successful treatments for cystic fibrosis (CF), the company is now expanding into new areas. This year, Vertex plans to file regulatory applications for zimislecel, a novel therapy for type 1 diabetes, alongside important late-stage data readouts for inaxaplin and povetacicept, potential treatments for kidney diseases.
Conclusion: Stock Potential
If any of these new treatments show efficacy, Vertex could significantly expand its portfolio while maintaining strong growth in its CF franchise and other recent products. This combination positions Vertex as an attractive stock this month.
Investment Considerations
The Motley Fool’s Stock Advisor team has noted that Intuitive Surgical was not included in their list of ten best stocks for investors to buy now, indicating that the market may have even more promising options available for significant returns. Historical examples like early investments in Netflix and Nvidia illustrate the potential for remarkable growth within adeptly chosen stocks.
