From Medicaid expansion to cancer drugs to minimally invasive treatment for heart disease, Industry Focus looks at the 10 top performers among large-cap healthcare stocks in 2014. There were some surprises on the list this year, with strong showings by an insurer and a med-tech company, in addition to the expected blockbuster drug manufacturers.

Fool analyst Michael Douglass and contributor Todd Campbell also share their favorites for the coming year.

A full transcript follows the video.

Michael Douglass: The best performing large-cap healthcare stocks of 2014 and what to expect for 2015: this is Industry Focus.

Hi Fools, Healthcare Analyst Michael Douglass here with contributor Todd Campbell. Todd, I've got to say, I really appreciate your choice in navy blue sweater today. For those who are listening, Todd and I appear to be wearing what is very close to the same sweater. I applaud you, sir.

Todd Campbell: It's a Tuesday, of course it's navy blue sweater day!

Douglass: Maybe we should make that a thing from now on, I don't know. Maybe that's the plan!

We're talking today about the large-cap healthcare stocks that have returned the most in 2014, and what folks can expect in 2015. In fact, we'll even talk about what our favorite picks are for 2015 out of that bunch.

Let's start with a couple that I found really surprising on that list. No. 7, Centene Corporation (NYSE:CNC). It's an insurer. We don't usually see huge price returns to insurers. What's the story here, Todd?

Campbell: It really comes down to Medicaid expansion. After the Supreme Court said that state had to opt in to expand Medicaid to more people, a lot of people thought, "What's the upside here for these private Medicaid insurers?" That's what Centene does.

I think the fact that, because 25 states embraced it this past year and millions more people have signed up for Medicaid coverage, Centene investors have obviously become much more enthusiastic, and for good reason.

For every person that signs up, the way that the contracts are negotiated with the states, profit drops immediately to their bottom line, so it's a good business to be in. Apparently, that came through in the share price this year.

Douglass: It's interesting because with Medicaid expansion, most of the easier states that were going to expand have already, right? A lot of your bigger states already have -- Texas, of course, is a holdout -- Pennsylvania and Michigan, Tennessee just recently announced that they're expanding Medicaid.

But it's going to be a state-by-state battle after this, so I'm not sure how much additional upside I see for Medicaid insurers' bottom lines over the long term. I feel like maybe a lot of it's gotten baked in by now.

Campbell: I think it's going to be a "steady as she goes" kind of stock. It's very rare that companies that are the leaders in one year go on to be the leaders in the next year, so even if Centene does well I'd be surprised to see it on this list at this time next year.

Douglass: Sure, that's fair enough.

Let's see, who else is on the list? Allergan (UNKNOWN:AGN.DL), probably no surprise, coming in at No. 3. What with the soap opera that was the Valeant (NYSE:BHC) and Allergan negotiations and then of course Actavis PLC (NYSE:AGN) coming in as the white night; probably no huge surprise there.

Campbell: Yes. I guess the real winner there were shareholders. The board held out, and the board was right to hold out, with all the back-and-forth and court cases between Actavis investor Bill Ackman, who had taken a stake and tried to negotiate a deal for Valeant to buy originally. When all was said and done, $66 billion was pretty compelling.

Douglass: Yes.

The No. 1, I would say probably the most shocking company on this list for me, Edwards Lifesciences (NYSE:EW). A med tech company, not a biotech, the number one biggest price return for a large cap healthcare stock in 2014, at least thus far. What's the story there?

Campbell: Shares doubled. That's pretty remarkable for a company like that. I think what it really just came down to is that you've got a company that has a growing niche market. Treating chronic heart disease; if you've got a heart valve that's faulty, you need to get it fixed. It's not discretionary. A lot of those patients, if they're very ill, open heart surgery is not the best decision.

Edwards has a new product that is minimally invasive, that allows people to do those surgeries more easily. I think a lot of people are thinking, "Wow, either maybe somebody steps in and acquires Edwards at some point, or Edwards just continues to earn away market share."

Again, though, I'd be surprised if it makes the list for next year.

Douglass: Totally shocked. The thing with med tech is just that you often see these slow and steady growth companies, but that doesn't usually catch people's imagination like a hyper growth biotech does.

Looking at this list of these top 10 stocks, which one's your favorite for 2015, of the bunch?

Campbell: There are a couple that I like, but I'd say out of all of them it's Regeneron (NASDAQ:REGN) that really appeals to me the most. I think they have a great drug in Eylea already approved, that's a top seller. It's used to treat vision loss in certain patients with age related macular degeneration and diabetic macular edema.

The drug is already putting out almost a $3 billion a year run rate, but that's not the reason that I like it so much for next year. It's the PCSK9 drug that it's working on that I think could be the big mover. That's because that drug is basically a bad cholesterol-busting drug.

Those PCSK9 drugs offer a lot of hope for patients who have stubborn bad cholesterol levels. Anything that you can do to reduce the likelihood of heart disease, I think is a billion-dollar drug potential.

Douglass: Yes. Alirocumab is the drug, and they're developing it with Sanofi (NYSE:SNY). Again, always a good sign when you've got a big pharma involved and closely part of that conversation.

Campbell: Yes, they actually own a stake in them.

Douglass: Yes, they do. It's 20%-something now, I believe.

Campbell: Yes. You look at that and you say, "What could the market really be for these drugs?" Well, statins are still the most widely prescribed drugs in America, and those are obviously prior generation cholesterol drugs.

Lipitor was probably the best known of them. That drug at one point had sales of $13 billion a year, at its peak. Now, I don't think that we're going to get anywhere near that with this class of drugs, but I could definitely see this being another significant blockbuster drug, which would then mean that Regeneron has two of them on the market, and that's worth a premium.

Analysts think that earnings next year are going to be up about 19% from 2014. That's really solid growth for a company like this. Admittedly, the shares aren't cheap, so we should probably disclose that right up front.

Douglass: Yes, that's very fair. But as you noted, you pay a premium for quality. When you do look at Regeneron's pipeline, it's got a number of exciting drugs in phase III, it's got several in phase II and I. I'm pretty excited about their process.

When I talk with some of the other healthcare analysts in-house, Max Macaluso and some of the others, we regularly are just like, "Wow, it is a great company." I don't know if it's cheap enough, but it is a great company.

That's your best bet for 2015?

Campbell: I think so. I like that one the most. I'm also going to give a shout out to a name that -- full disclosure -- I own, which is Medivation (NASDAQ:MDVN). I think that that stock could be a solid performer this year as well.

They make a prostate cancer drug that has already gone on to become the market share leader in post-chemotherapy prostate cancer use. They just this past September got the nod from the FDA to use that drug, Xtandi, in the pre-chemotherapy indication.

Just for comparison, Zytiga which is another drug, a competing drug, that's about a $2 billion-plus drug. I think that Medivation could eclipse $1 billion in sales for Xtandi this year, and has a really good shot at getting closer to the $1.5 billion range.

Again, take that with a grain of salt. We never know what's really going to pan out in any of these drugs once they get up to speed, but based on what it did in the post-chemotherapy indication, I think it has a really good shot.

Douglass: Yes, it could hit that blockbuster runway next year, which would be huge. That said, as you mentioned Medivation and Astellas' (NASDAQOTH: ALPMY) drug, Xtandi, certainly ... Whenever someone's going head-to-head with Johnson & Johnson (NYSE:JNJ), which is the Zytiga, I always hesitate to bet against Johnson & Johnson. But Xtandi does seem to be a drug that, as you noted, is really gobbling up market share.

Now that it moves into that pre-chemotherapy indication for prostate cancer -- which is an area where there's a lot of need; prostate cancer is a pretty common cancer and a big killer of men here in the United States, so really important to get more drugs, more options, better options out on the market -- so I think there's a lot of opportunity with Medivation.

I think that's one I'm going to be watching pretty closely, although I would agree with you, when I look at this list Regeneron is probably my favorite.

Campbell: Yes, as far as quality goes. I had a tough time deciding between the two, but the reason that I picked Regeneron is just that I feel like it has a little bit more pipeline depth. It has the potential, obviously, for a second drug this year, where Medivation is... I don't want to call it a one-horse show, but it kind of is for now!

Douglass: That's a good point, and that means that you do have more risk when that happens, because if something goes wrong, somebody else comes out with a competitor, somebody else starts revealing really good data and doctors start warehousing patients, then that's going to immediately hurt Medivation while that other drug moves up in the clinical trials.

Definitely something we want to watch very, very closely, and I think something that does put it a little bit further down from Regeneron on that list.

Todd, thank you. Thanks for your thoughts today. Folks, as you know, here at The Motley Fool we have a lot of investment styles; we're motley, that's the whole point! One of the big things that we focus on here, particularly in healthcare, is growth. We're always looking at growth stocks.

David Gardner, one of our co-founders, talks extensively about growth stocks in one of his newsletters, which is Send us an email at and we can tell you a little bit more about how David identifies those kinds of fantastic growth stocks that could potentially give market beating returns.

Todd, again thank you. Check back to for all of your healthcare and other investing needs. For The Motley Fool, I'm Michael Douglass. Fool on! 

Todd Campbell owns shares of Medivation, Inc.. The Motley Fool recommends Johnson & Johnson and Valeant Pharmaceuticals. The Motley Fool owns shares of Johnson & Johnson and Valeant Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.