Should You Add a Healthcare Stock to Your Portfolio This Month? And Should It Be Eli Lilly (LLY)?

If you're looking to add to your long-term stock portfolio, it can make good sense to consider a healthcare stock. After all, healthcare is big business, and with baby boomers only getting older, it's likely to keep getting bigger. Indeed, per the Peterson-KFF Health System Tracker:

Health spending increased by 7.2% from 2023 to 2024, similar to the 7.4% increase from 2022 to 2023 but faster than the 4.8% increase from 2021 to 2022. The growth in total health spending from 2023 to 2024 is well above the average annual growth rate of the 2010s (4.2%).

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There are many different kinds of healthcare stocks to consider, such as pharmaceutical companies, medical device makers, and companies that make surgical supplies. A particularly interesting one to consider is Eli Lilly (NYSE: LLY).

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As you might know, Lilly is a leader in the burgeoning weight-loss drug realm, with approved drugs on sale, and more in development in its pipeline. Speaking of its pipeline, it appears fairly strong -- and getting stronger. One way that's happening is via acquisition; the company recently announced it's spending some $7 billion to buy the privately held company Kelonia Therapeutics -- and its KLN-1010 CAR-T gene therapy for treating cancer, which is currently in phase 1 trials.

It's smart to not have too many eggs in the weight-loss basket, since there is competition there. Eli Lilly spent 20.5% of its revenue on research and development in 2025, and has about a quarter of its workforce focused on research. It's clearly seeking future blockbusters.

Meanwhile, Lilly's stock's valuation seems rather reasonable. Its recent forward-looking price-to-earnings (P/E) ratio is 40, well below its five-year average of 56. Both those numbers are on the steep side. But they seem less steep when you consider that for the fourth quarter the company reported that revenue was up 43% year over year and earnings per share (EPS) up 51%.

There are many other appealing healthcare stocks out there. But if you're intrigued, go ahead and give Eli Lilly a closer look.

Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.