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By Renee O'Farrell

Healthcare costs have been on the rise. Annual medical costs increased almost 35% from 2006 to 2010, with healthcare spending rising 8% a year (read more about it here). While this fact might hit consumers hard, for investors, it is great news. Between rising spending and rising costs, healthcare stocks are going to go up as well. However, those increases are not necessarily going to be realized equally across the board. Instead, some healthcare stocks make better investments than others.

Hold Amgen (NASDAQ:AMGN). It recently traded at $70.40 a share, up 9.74% for the year. This company's earnings per share has increased by 10.39% over the last five years and is expected to rise an average of 10.15% a year over the next five. Amgen has an operating margin of 27.30% and is currently priced at 10.31 times its forward earnings. Amgen looks pretty attractive but other companies in its industry are priced just as low relative to future earnings but have higher earnings growth estimates going forward. Both Jim Simons' Renaissance Technologies and David E. Shaw's D E Shaw cut their holdings in Amgen during the fourth quarter.

Hold Biogen Idec (NASDAQ:BIIB). It is another good example. It is trading at $136.18 a share, up over 22% year to date. Biogen's earnings per share has gone up 53.14% over the past five years and is expected to increase by almost 12% a year on average over the next five years. The company also boasts an impressive operating margin of 33.63%. However, its forward price-to-earnings ratio is a little high at 18.55. Andreas Halvorsen's Viking Global cut its stake in Biogen by 42% in the fourth quarter.

Buy Gilead (NASDAQ:GILD) (click here for an in-depth look at Gilead). It recently traded for $51.43 a share, up 25.21% year to date. Gilead's earnings per share rose 31.09% over the last five years and is expected to increase by 15.29% a year. The company has an operating margin of 45.84 and is priced at just 11.73 times its forward earnings. Christopher Medlock James' Partner Fund Management is so bullish about this stock it initiated a position in the company worth $590.99 million during the fourth quarter, or roughly 6.76% of its portfolio. Steve Cohen's SAC Capital Advisors and Jacob Gottlieb's Visium Asset Management are also fans of the company.

Buy Celgene (NASDAQ:CELG). It recently traded at $70.72 a share. Year to date, the stock has returned 4.51%. Right now, the stock is priced at just 12.57 times its forward earnings, which is incredibly low given that this company has built its earnings per share up 60.29% over the last five years and is expected to increase its earnings per share by an average of 24.37% a year for the next five years. Celgene also has a strong operating margin of 27.62%. Legg Mason Capital Management, D. E. Shaw and Samuel Isaly's Orbimed Advisors are fans of Celgene.

Source: 2 Healthcare Companies To Buy, 2 To Hold