Five Healthcare Stocks That Align with Benjamin Graham's Value Investing Framework - 11/17/2025

Understanding Benjamin Graham’s Value Screening Approach

Benjamin Graham, widely recognized as the architect of security analysis and a pioneer in value investing, developed a rigorous methodology that has influenced generations of investors, including Warren Buffett and John Templeton. His investment principles focus on identifying stocks trading below their intrinsic value through disciplined screening criteria. The Validea platform applies Graham’s documented strategy, which emphasizes identifying companies with attractive valuations—characterized by low P/E and P/B ratios—combined with solid long-term earnings trajectories and conservative debt levels.

Graham’s investment philosophy proved remarkably durable, delivering approximately 20 percent annual returns between 1936 and 1956, substantially exceeding the market’s 12.2 percent average return during that era. His approach remains relevant for modern investors seeking to construct portfolios based on fundamental strength rather than market sentiment.

Validea’s Benjamin Graham-Aligned Healthcare Selections

Validea’s screening process identifies healthcare sector stocks that satisfy Graham’s value criteria. All five stocks discussed below received a 71% rating according to the Graham-based methodology—a score reflecting solid alignment with fundamental quality metrics, though short of the 80%+ threshold that typically signals heightened strategic interest.

Medical Device Innovation: Intuitive Surgical and Edwards Lifesciences

Intuitive Surgical Inc (ISRG) represents a large-cap growth position within the medical equipment and supplies sector. The company develops and manufactures da Vinci surgical systems alongside the Ion endoluminal platform, specializing in robotic-assisted surgical interventions. Surgeons utilize the da Vinci technology across general surgery, urology, gynecology, cardiac, and head-and-neck procedures through integrated console, patient-side cart, and vision system components. The Ion platform extends the company’s reach into diagnostic and minimally invasive lung biopsy procedures. ISRG passes six of Validea’s Graham-derived tests—sector strength, sales generation, current ratio adequacy, manageable long-term debt, and sustained EPS expansion—though it registers failures on P/E and price-to-book valuations.

Edwards Lifesciences Corp (EW) operates as a dominant force in structural heart disease treatment, offering transcatheter solutions and surgical therapies. The company’s product portfolio includes TAVR (transcatheter aortic valve replacement) technologies such as the Edwards SAPIEN 3 and Ultra variants, TMTT (transcatheter mitral and tricuspid therapies) systems including the PASCAL and EVOQUE platforms, and innovative surgical valve offerings featuring RESILIA tissue technology. Geographic diversification spans the United States, Europe, Japan, and international markets. Edwards similarly passes six Graham criteria while encountering valuation headwinds on P/E and price-to-book measures.

Pharmaceutical and Biotech Specialists: United Therapeutics and Bio-Techne

United Therapeutics Corp (UTHR) operates in the biotechnology and pharmaceutical segment, concentrating on pulmonary arterial hypertension (PAH) and related conditions. The company markets treprostinil-based therapies across multiple formulations—Tyvaso DPI inhalation powder, nebulized Tyvaso solution with its proprietary delivery system, Remodulin injectable formulation, and Orenitram extended-release tablets—alongside Adcirca for PAH management. The Tyvaso DPI platform incorporates dry powder technology and represents a drug-device combination, while United Therapeutics also offers Unituxin for high-risk neuroblastoma treatment and the Remunity infusion pump. UTHR demonstrates strength across sector health, sales velocity, current positioning, debt management, and long-term earnings growth, though valuation metrics on P/E and price-to-book ratios present challenges.

Bio-Techne Corp (TECH), classified as a mid-cap growth stock, manufactures life science reagents, instruments, and services for research, diagnostics, and bioprocessing applications globally. The company operates through two segments: Protein Sciences, which develops biological reagents for research and therapeutic applications, and Diagnostics and Spatial Biology, which produces diagnostic controls, calibrators, and assays alongside advanced tissue-analysis instrumentation for spatial genomic and oncology applications. Bio-Techne’s capabilities span scientific investigation into biological mechanisms and disease progression assessment. The company passes six Graham evaluation criteria related to operational fundamentals but faces valuation pressures on P/E and price-to-book metrics.

Healthcare Services: Centene’s Integrated Model

Centene Corp (CNC), a large-cap entity in healthcare facilities and services, provides integrated offerings to government-sponsored and commercial insurance programs, focusing on underserved populations. The company segments operations into Medicaid (encompassing TANF, expansion programs, ABD, CHIP, LTSS, and Medicare-Medicaid Plans for dually eligible beneficiaries), Medicare (featuring Advantage, Supplement, Dual-Eligible SNPs, and prescription coverage), Commercial (health exchange marketplaces and group insurance products), and Other programs. Centene’s diversified revenue streams and enrollment base provide operational stability. Under the Benjamin Graham framework, CNC passes sector assessment, sales generation, long-term earnings growth, and valuation tests on P/E and price-to-book, though it encounters constraints on current ratio and debt-to-net-current-assets measures.

Graham’s Legacy in Contemporary Portfolio Construction

Benjamin Graham’s principles transcend market cycles, offering a foundational framework for identifying durable businesses with reasonable valuations. Validea’s application of these methodologies to contemporary healthcare holdings demonstrates how disciplined, metrics-driven stock selection remains viable in modern markets. While no scoring system captures every dimension of investment quality, Graham’s emphasis on financial fundamentals provides essential guardrails against both speculative excess and value-destroying acquisitions.

For investors considering healthcare sector exposure through a value lens, these five Validea-selected stocks warrant examination for alignment with individual investment objectives and risk tolerances.

Validea is an investment research platform applying documented strategies of historical investment luminaries. The service offers stock analysis and model portfolios informed by Warren Buffett, Benjamin Graham, Peter Lynch, Martin Zweig, and additional accomplished investors.

The perspectives expressed herein represent the author’s views and do not necessarily constitute endorsement by any affiliated entity.