Healthcare Sector Deep Dive: Which Stocks Align With Value Investing Principles - November 2025

Benjamin Graham’s value investing framework continues to resonate with modern investors seeking stocks trading below intrinsic value. This analysis examines five healthcare stocks through the lens of Graham’s proven methodology, which emphasizes low valuation multiples, strong balance sheets, and sustainable earnings trajectories. Let’s explore how these companies stack up against time-tested investment criteria.

Understanding the Graham Value Filter

Before diving into specific securities, it’s worth noting that Graham’s screening approach prioritizes P/B ratios, P/E multiples, debt management, and long-term earnings consistency. Companies that exhibit attractive valuations alongside solid fundamentals typically warrant closer examination. Each of the stocks below received a 71% rating based on adherence to these core principles.

Medical Device Innovation: Intuitive Surgical Inc (ISRG)

INTUITIVE SURGICAL INC (ISRG) operates in the Medical Equipment & Supplies segment as a large-cap growth equity. The company engineers and commercializes da Vinci surgical systems alongside the Ion endoluminal platform, pioneering minimally-invasive robotic-assisted interventions.

The da Vinci ecosystem enables surgeons to perform complex procedures across general surgery, urology, gynecology, cardiothoracic, and head-and-neck specialties. Meanwhile, the Ion system extends capabilities into diagnostic and endoluminal procedures through flexible, catheter-based robotics.

Financial Positioning: Against Graham’s criteria, ISRG demonstrates strength in sector performance, sales momentum, current ratio, and long-term debt management relative to net current assets. The company sustains solid long-term EPS growth patterns. However, P/E and Price/Book ratios present valuation concerns, suggesting the market prices in robust future performance expectations.

Cardiovascular and Structural Heart Focus: Edwards Lifesciences Corp (EW)

EDWARDS LIFESCIENCES CORP (EW) represents the medical device sector’s structural heart specialist, classified as a large-cap growth security. The organization develops transcatheter and surgical solutions for patients with structural heart disease.

Key product franchises include Transcatheter Aortic Valve Replacement (TAVR) technologies—notably the SAPIEN 3 and SAPIEN 3 Ultra systems—alongside Transcatheter Mitral and Tricuspid Therapies (TMTT), which encompass the PASCAL repair system, EVOQUE tricuspid replacement, and Cardioband reconstruction platform. The surgical division markets devices like the INSPIRIS RESILIA valve with proprietary RESILIA tissue technology.

Valuation Assessment: Edwards exhibits favorable sector positioning, revenue growth, current ratio stability, and judicious debt management. Long-term EPS expansion remains on track. Nevertheless, elevated P/E and P/B multiples signal market optimism that may not align with strict value parameters.

Pharmaceutical Specialty: United Therapeutics Corp (UTHR)

UNITED THERAPEUTICS CORP (UTHR) competes in the Biotechnology & Drugs arena as a large-cap growth holding. The pharmaceutical manufacturer specializes in pulmonary arterial hypertension (PAH) therapies and emerging oncology treatments.

The PAH portfolio encompasses Tyvaso DPI (treprostinil inhalation powder), nebulized Tyvaso with integrated inhalation system, Remodulin (treprostinil injection), and Orenitram (treprostinil tablets), with Adcirca (tadalafil) complementing the lineup. Notably, Tyvaso DPI and nebulized formulations gained approval for pulmonary hypertension linked to interstitial lung disease (PH-ILD). On the oncology side, Unituxin (dinutuximab) treats high-risk neuroblastoma, while the Remunity Pump delivers Remodulin therapy. Tyvaso DPI incorporates dry powder innovation derived from MannKind’s Afrezza technology platform.

Financial Profile: UTHR passes sector, sales, current ratio, and long-term debt assessments, alongside demonstrating long-term EPS growth capability. However, P/E and Price/Book ratios fall short of value investing thresholds, indicating premium valuation relative to book value and earnings multiples.

Healthcare Coverage Models: Centene Corp (CNC)

CENTENE CORP (CNC) operates within Healthcare Facilities as a large-cap growth enterprise. The organization delivers fully integrated healthcare services targeting government-sponsored and commercial programs, with particular emphasis on underserved populations.

Operating segments span Medicaid (including TANF, expansion programs, ABD, CHIP, LTSS, Foster Care, and Medicare-Medicaid Plans), Medicare (covering Advantage, Supplement, Dual Eligible Special Needs Plans, and prescription drug offerings), and Commercial (Health Insurance Marketplace products plus individual, small group, and large group plans).

Graham Criteria Alignment: Centene demonstrates strength in sector evaluation, sales expansion, and long-term earnings growth. P/E ratios and Price/Book valuations appear reasonable under Graham’s framework. However, current ratio and long-term debt relative to net current assets present some friction, suggesting balance sheet considerations warrant attention.

Life Science Reagents and Diagnostics: Bio-Techne Corp (TECH)

BIO-TECHNE CORP (TECH) functions as a mid-cap growth vehicle in Biotechnology & Drugs, developing and manufacturing life science solutions globally. The organization serves research, diagnostics, and bioprocessing markets through two primary divisions.

The Protein Sciences segment manufactures biological reagents for life science research, diagnostics, cell therapy, and gene therapy applications. The Diagnostics and Spatial Biology division produces diagnostic controls, calibrators, and assays for regulated markets, alongside spatial genomics instrumentation and tissue-based in-situ hybridization platforms for genetic and oncology applications. This product ecosystem supports scientific investigation and molecular diagnostics across disease progression tracking.

Evaluation Results: Bio-Techne satisfies sector, sales, current ratio, and debt management criteria alongside demonstrating long-term EPS growth. Similar to peers, P/E and Price/Book multiples exceed value thresholds, reflecting market pricing assumptions about future performance sustainability.

The Graham Legacy in Modern Portfolio Construction

Each healthcare stock examined maintains a 71% alignment score with Benjamin Graham’s value investing methodology. While Graham emphasized purchasing stocks with limited downside risk and clear margin of safety, today’s valuations in high-quality healthcare and medical device sectors often incorporate premium multiples reflecting operational excellence and market positioning.

Investors applying Graham’s principles must weigh balance sheet strength, earnings trajectory, and competitive moats alongside absolute valuation metrics. The healthcare sector’s structural tailwinds—aging demographics, innovation in therapeutics, and expanding access to advanced care—may justify elevated valuations for certain qualified operators, yet traditional Graham adherents typically demand more significant discounts to book value.

Summary Takeaway

The healthcare sector continues generating compelling opportunities for value-oriented investors willing to examine fundamentals beyond headline multiples. Understanding each company’s specific financial profile—from balance sheet stability to earnings growth rates—remains essential for navigating the intersection of quality healthcare exposure and disciplined value investing principles that Graham championed throughout his legendary career.