My Top 3 Healthcare Stocks for May 2026

Federal healthcare spending is projected to rise from less than $2 trillion today to more than $3 trillion within a decade, per the Committee for a Responsible Federal Budget. Some reasons for the increase include greater use of GLP-1 drugs for weight loss, increasing cancer diagnoses, costly specialty medicines, increased workforce costs due to shortages, and more people with chronic health problems, such as diabetes.

So it makes sense to look to the healthcare field for promising investments. Here are a few to consider.

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1. Pfizer

Pfizer (NYSE: PFE) was doing well during the early years of COVID-19 -- but those days are behind it, as demand for its vaccine and Paxlovid treatment has slumped. It has other irons in the fire, though, via its robust pipeline of drugs in development, including some cancer and weight-loss drugs.

Its shares seem attractively valued at recent levels, too, with a forward-looking price-to-earnings (P/E) ratio of 9.0, a bit below the five-year average of 9.7. Better still, Pfizer's dividend was recently yielding 6.5%!

Pfizer may not grow briskly for a while, but it will pay you well to wait.

2. Intuitive Surgical

It's not often that you can buy shares of Intuitive Surgical (NASDAQ: ISRG) at an attractive price. But it recently sported a forward P/E of 44, well below its five-year average of 55. (Admittedly, both those numbers are on the steep side.)

Its valuation isn't the only reason to invest in this giant in the robotic surgery arena. It's also simply a great business. Its robotic surgery systems are pricey, costing $1 million or more, but it gets about 77% of its revenue from instruments, accessories, and servicing. That's recurring revenue, on top of continued sales of its machines.

3. Eli Lilly

Eli Lilly (NYSE: LLY) has had a great run lately, thanks to its blockbuster GLP-1 weight-loss drugs such as Mounjaro/Zepbound. Its stock has averaged annual gains of 39.3% over the past five years!

Year to date, though, shares have been down about 7.7% (as of May 12). This presents an opportunity for investors, with Eli Lilly's forward P/E recently at 29, below the five-year average of 37.

Consider that in its first quarter, revenue surged 56% year over year to $19.8 billion, while adjusted earnings per share soared 156%. Sales of Mounjaro and Zepbound grew by 125% and 80%, respectively. The company keeps cranking out new drugs, too, such as Foundayo, an oral GLP-1 medicine that bypasses shots.

Eli Lilly's stock might look pricey with a recent share price topping $1,000, but a stock's price alone doesn't mean much. You need to compare it to, say, revenue or earnings, and to crunch other numbers to see whether it seems under- or overvalued. Lilly's shares actually seem attractively valued.

Any or all these stocks could serve you well. Pfizer is ready to deliver significant income while you wait for greater growth, and Intuitive Surgical and Eli Lilly are already growing briskly. Take a closer look at any solid healthcare stocks that intrigue you.

Selena Maranjian has positions in Intuitive Surgical and Pfizer. The Motley Fool has positions in and recommends Eli Lilly, Intuitive Surgical, and Pfizer. The Motley Fool recommends the following options: long January 2028 $520 calls on Intuitive Surgical and short January 2028 $530 calls on Intuitive Surgical. The Motley Fool has a disclosure policy.