Top 5 Undervalued Healthcare Stocks to Buy in August 2025

Uncover Hidden Gems with High Profit Potential

The healthcare sector is a goldmine for investors seeking stability and growth. In August 2025, we’ve identified five undervalued healthcare stocks with exceptional upside potential, analyzed using key metrics like P/E ratio, P/B ratio, Free Cash Flow (FCF), Discounted Cash Flow (DCF) models, and debt-to-equity ratio. These stocks are poised to deliver significant returns, combining defensive characteristics with robust growth prospects. Dive into our expertly curated list below!

1. UnitedHealth Group Incorporated (UNH)

Why It’s Undervalued: UnitedHealth Group, the largest health insurer in the U.S., is trading at a significant discount to its intrinsic value due to temporary political concerns over healthcare policies and operational challenges. Its integrated care model, scale advantages, and exposure to an aging population’s growing healthcare needs make it a compelling buy.

P/E Ratio: 12.9 (below industry average of 15.8)

P/B Ratio: 4.8 (reasonable for its sector dominance)

FCF: $17.2B (strong cash generation)

DCF Valuation: 237.0% undervalued

Debt-to-Equity Ratio: 0.64 (manageable debt levels)

Upside Potential: Up to 38% based on analyst targets

2. Pfizer Inc. (PFE)

Why It’s Undervalued: Pfizer’s stock is undervalued due to market concerns over post-COVID revenue declines and upcoming patent cliffs. However, its robust oncology pipeline, strategic acquisitions like Seagen, and strong cash flow position it for a rebound, particularly in high-growth therapeutic areas.

P/E Ratio: 8.7 (well below healthcare sector’s 15.8)

P/B Ratio: 1.7 (indicating undervaluation relative to assets)

FCF: $8.9B (solid cash flow for reinvestment)

DCF Valuation: 32.0% undervalued

Debt-to-Equity Ratio: 0.68 (balanced capital structure)

Upside Potential: Up to 13.7% per analyst estimates

3. Amgen Inc. (AMGN)

Why It’s Undervalued: Amgen’s stock is trading below its intrinsic value due to concerns over biosimilar competition and pipeline execution risks. Its acquisition of Horizon Therapeutics and diversified portfolio in oncology and rare diseases signal strong future growth potential.

P/E Ratio: 19.6 (competitive within biotech)

P/B Ratio: 22.5 (high but justified by growth prospects)

FCF: $7.5B (robust for R&D and dividends)

DCF Valuation: 113.0% undervalued

Debt-to-Equity Ratio: 10.5 (higher but manageable given cash flows)

Upside Potential: Up to 19.6% per analyst targets

4. AbbVie Inc. (ABBV)

Why It’s Undervalued: AbbVie is undervalued due to market fears over the Humira patent cliff. Its diversified portfolio, strategic acquisitions like Allergan, and strong pipeline in immunology and oncology make it a resilient long-term investment.

P/E Ratio: 15.1 (slightly below sector average)

P/B Ratio: 36.2 (high but supported by earnings power)

FCF: $17.8B (exceptional cash generation)

DCF Valuation: 135.0% undervalued

Debt-to-Equity Ratio: 9.3 (elevated but sustainable)

Upside Potential: Up to 20% based on analyst forecasts

5. Medtronic plc (MDT)

Why It’s Undervalued: Medtronic’s stock is trading at a discount due to slower growth perceptions and recent strategic shifts, like canceling a planned spin-off. Its diversified medical device portfolio and expansion in robotic surgery position it for steady growth.

P/E Ratio: 16.3 (below industry median)

P/B Ratio: 2.3 (attractive for a medical device leader)

FCF: $5.2B (healthy for innovation and dividends)

DCF Valuation: 13.0% undervalued

Debt-to-Equity Ratio: 0.49 (low, reflecting financial stability)

Upside Potential: Up to 10.9% per analyst targets

Why Invest in Undervalued Healthcare Stocks?

Healthcare stocks offer a unique blend of defensive stability and growth potential, driven by aging populations, medical innovation, and consistent demand. The stocks listed above are undervalued based on rigorous analysis of P/E, P/B, FCF, DCF, and debt-to-equity ratios, making them prime candidates for investors seeking high returns in August 2025. Don’t miss out on these hidden gems—act now to capitalize on their upside potential!