Healthcare stocks can make big moves up and down because of clinical trial results, regulatory decisions, and political posturing, and that can make figuring out when to add them to your portfolio tough. To help make it easier, we asked three Motley Fool healthcare investors what stocks they think are buys currently, and they answered with Esperion Therapeutics (NASDAQ:ESPR), Healthcare Services Group (NASDAQ:HCSG), and Alexion Therapeutics (NASDAQ:ALXN).

Read on to see if these stocks could be worth adding to your portfolio.

Big catalysts are approaching fast

Todd Campbell (Esperion Therapeutics): Esperion Therapeutics founder Roger Newton led the development of Lipitor, a cholesterol-busting drug that was the world's best-selling medicine before it lost patent protection in 2011.

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Today, Esperion is developing a new cholesterol drug called bempedoic acid. It can be used alongside existing cholesterol medications, including Lipitor, or in patients that can't take statins. 

The company began reporting data from late-stage trials that could support a Food and Drug Administration (FDA) filing for approval in March, and so far, the results look good. Adding bempedoic acid to Zetia -- another cholesterol-lowering drug -- lowered bad cholesterol by an additional 23% in statin-intolerant patients.

Data from two more phase 3 studies -- one in patients on maximally tolerated statin therapy and another in statin-intolerant patients -- is anticipated in May. If that data is also positive, then it will add conviction to the thinking that bempedoic acid has billion-dollar blockbuster potential.

Tens of millions of Americans already take statins and many patients still fail to hit their bad cholesterol targets. As a result, Esperion Therapeutics thinks bempedoic acid's addressable market could be north of 10 million people.

Bempedoic acid's opportunity is undeniably big. However, it's the only drug in Esperion Therapeutics' pipeline, and there are no guarantees that its trials will hit their mark. Nevertheless, I think the potential justifies the risk of failure, so adding at least a little bit to portfolios now could be a smart move.

Short-term pain, long-term gain

Brian Feroldi (Healthcare Services Group): Healthcare Services Group provides sanitation and dietary services to a variety of healthcare facilities in the U.S. (mostly nursing homes, rehabilitation centers, and hospitals). Since the demand for these mission-critical services remains high no matter what is going on the economy, Healthcare Services Group has posted remarkably consistent results for decades. Revenue has grown almost every single year since the company went public in 1985. Net income and free cash flow have largely followed suit. This financial stability has allowed the company to increase its dividend each quarter since it first initiated a payout in 2003.

While the ride has largely been smooth, the company recently threw investors a curveball when it reported first-quarter results. Management informed shareholders that two of its large customers were experiencing financial trouble, forcing them to go through major restructurings. In response, Healthcare Services Group decided to record a one-time $35 million charge in case it wouldn't be able to fully collect on what it is owed.

Predictably, this news didn't sit well with Wall Street. Traders responded to the trouble by knocking shares down nearly 30% from their all-time high.

So is the investing thesis for owning this long-term winner broken? I don't think so for a few reasons:

  • Management took this charge proactively and is still actively pursuing collection. While it's hard to handicap the odds of success, the company might still be able to collect at least a portion of what it's owed.
  • Healthcare Services Group believes firmly that this situation is a one-time bump in the road and that it will not have any impact on future revenue. 
  • Companywide revenue still grew 24% in the most recent quarter as it continues to upsell dining services to its customer base.

Overall, I'm convinced that this recent trouble is just a setback and that the company's long-term growth story remains intact. With shares currently valued at around 21 times next year's earnings and offering up a dividend yield of 1.8%, I think it's a great time to buy into this rock-solid growth story.

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Rare value in a high-growth industry

Sean Williams (Alexion Pharmaceuticals): Since briefly cresting above $200 a share in 2015, rare-disease drug developer Alexion Pharmaceuticals has struggled, losing almost half of its value. Much of this loss can be traced to two catalysts: 1. growing concerns over the possibility of congressional drug-price controls, and 2. the failure of lead drug Soliris in a phase 2/3 trial in kidney transplant patients at high risk of delayed graft function (DGF). While these are clear concerns, this investor believes Alexion Pharmaceuticals could offer an intriguing value and growth proposition for investors. 

To begin with, Alexion has Soliris in its corner, which is currently the most expensive drug in the world on an annual basis. The fact that Alexion targets rare disease indications minimizes the chance that it'll face competition at any point in the near term (or possibly even after the expiration of Soliris' patents) for approved indications, and also allows it to pass along price hikes that match or top the annual inflation rate.

Soliris' ability to expand its label has also been a key to Alexion's success. Initially approved to treat paroxysmal nocturnal hemoglobinuria in 2007, its label has since been expanded to include patients with atypical hemolytic uremic syndrome in 2011, and patients with generalized myasthenia gravis in 2017. Despite the failure of Soliris in kidney transplant patients with DGF, Soliris still has a promising chance of further broadening its label. 

Alexion also has complementary products that are doing their part. Sales for Strensiq vaulted higher by 62% in 2017 to almost $340 million, while Kanuma sales practically doubled to $65.6 million.  

Looking into the distance, Alexion should be able to deliver sales and profit growth north of 10% per annum. It's already valued at an exceptionally low forward P/E of 12.7, and a PEG ratio of just over 0.9. Typically, anything below 1 is considered cheap. With drug-price regulation looking unlikely on Capitol Hill and Soliris remaining virtually unstoppable, I believe value and growth investors would be wise to give Alexion a closer look.

Brian Feroldi has no position in any of the stocks mentioned. Sean Williams has no position in any of the stocks mentioned. Todd Campbell owns shares of Esperion Therapeutics and his clients may have positions in the companies mentioned. The Motley Fool recommends Healthcare Services Group. The Motley Fool has a disclosure policy.