We recently compiled a list of the 10 Best Performing S&P 500 Stocks So Far in 2025. In this article, we are going to take a look at where CVS Health Corporation (NYSE:CVS) stands against the other stocks.
Emily Rowland, co-chief investment strategist at John Hancock Investment Management, joined a discussion on CNBC’s ‘Squawk Box’ on February 13 to share her insights on the markets and the upcoming PPI (Producer Price Index) report. She thinks that the S&P earnings are highly underappreciated right now. She noted that the market’s reaction to inflation data has been asymmetric. While higher inflation numbers are often shrugged off, any relief from softer inflation prints tends to cause bigger moves in the markets. This was evident in the response to the CPI (Consumer Price Index) report. Regarding market performance, Rowland highlighted that the S&P 500 earnings were coming in with strong growth (16% year-over-year for the fourth quarter) and this growth is broad-based across sectors like healthcare and utilities. Financials also showed significant gains with a 50% increase.
On discussing President Trump’s announcement of retaliatory tariffs via Truth Social, Rowland said that her team avoids making tactical investment decisions based on political outcomes due to their unpredictability and rapid changes. In terms of attractive sectors for investment within US markets, she highlighted healthcare and industrial companies as promising areas due to their strong fundamentals and potential benefits from ongoing supply chain reshoring activities within the US. While acknowledging political factors can influence sector performance, her strategy focuses on longer-term economic trends rather than short-term political developments when considering investments in key indices like those represented by major US equities such as those found in the S&P 500 index.
Methodology
We first sifted through the Finviz stock screener to compile a list of the best-performing S&P 500 stocks. We then picked the top 10 stocks with the highest year-to-date performance, as of February 17. The stocks are ranked in ascending order of their year-to-date performance. We’ve also added the hedge fund sentiment for each stock which was sourced from Insider Monkey’s database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A row of shelves in a retail pharmacy, demonstrating the variety of drugs and over-the-counter products.
CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 63
Year-to-Date Performance as of February 17: 46.65%
CVS Health Corporation (NYSE:CVS) provides health solutions in the US through its Health Care Benefits, Health Services, and Pharmacy & Consumer Wellness segments. The Health Care Benefits segment offers health insurance products and services. The Health Services segment provides pharmacy benefit management solutions. The Pharmacy & Consumer Wellness segment sells prescription and over-the-counter drugs and related products.
Its Health Services segment, particularly its PBM (Caremark), contributed to the stock’s recent surge. Q4 2024 revenue was about $47 billion, though down 4% from a year-ago period. For 2025, the segment is projected to generate about $185 billion in revenue driven by Caremark. Caremark negotiates lower drug prices, generating an estimated $100 billion in annual value for the US healthcare system. Initiatives like TrueCost for price transparency and high biosimilar adoption, such as converting over 90% of Humira patients, and generating $1 billion in savings, highlight Caremark’s focus.
While growth is currently tempered by headwinds in Medicare-related healthcare delivery, core pharmacy services are strong, with improved healthcare delivery performance expected from 2026. This is further reinforced by analyst upgrades. RBC Capital analyst Ben Hendrix raised the company’s price target to $74 from $58 and maintained an Outperform rating on February 15. He believes that CVS Health Corporation (NYSE:CVS) is past its earnings trough, with 2025 guidance exceeding expectations.
Ariel Global Fund bought the company earlier in the past year, believing that the stock’s price drop due to PBM and Medicare concerns presented an attractive entry point for a potential rebound. It said the following regarding CVS Health Corporation (NYSE:CVS) in its first quarter 2024 investor letter:
“We bought American healthcare company, CVS Health Corporation (NYSE:CVS), following recent concerns related to potential new laws affecting Pharmacy Benefit Managers (PBMs)—intermediaries that negotiate drug prices between insurers and pharmacies—and issues with pricing in its Medicare Advantage plans, a type of health insurance for senior citizens. Shares presented an attractive entry point after the company lowered its 2024 outlook. While investor apprehension regarding the new laws appears to have eased, utilization of Medicare Advantage plans is also stabilizing. Our purchase of CVS reflects our efforts to capitalize on temporary setbacks and secure positions in companies poised for a rebound.”
Overall CVS ranks 3rd on our list of the best performing S&P 500 stocks so far in 2025. While we acknowledge the potential of CVS as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CVS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.