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Pharmaceutical stocks have long been a bullish territory. The problem with many of them is that they are solely dependent on whether or not their products will get FDA approval. Below are two pharmaceutical stocks with high ceilings:

Teva Pharmaceutical (TEVA) is one of the leaders in generic pharmaceutical with a market cap of $42 billion. They make many of the branded drugs you see on the shelves in your local pharmacy or grocery store. Unlike smaller companies, TEVA doesn't have the problems with being dependent on one of their products gaining FDA approval. Being such a large corporation they make such an array of products where they are able to push out the competition. Many analysts predict that TEVA is so far ahead of the curve that many of their drugs won't see substantial competition until at least 2014, maybe even later. TEVA has a strong book of business with a strong PEG Ratio of 0.89, a forward earnings multiple of 9.7, and a book value multiple of 2.1 all bullish indicators. Adding to this, TEVA pays out a dividend of 2% annually. Wall Street is very favorable towards TEVA with 81% of analysts giving it a “Buy” rating. I personally, believe TEVA has a large upside as I expect the stock to soar all the way to $80 a share, a total yield of 75.

Vanda Pharmaceuticals (VNDA) is a biotech company that does research for large pharmaceutical corporations. Currently Vanda has two drugs with high ceilings, Fanapt, an anto-schizophrenia drug, which was approved by the FDA in May 2009. Vanda's strategy worked well with the drug only problem was they had to pay large royalties to their partner Novartis for the approval of the drug. Adding to that VNDA also carries the drug, Tasimelteon, which is used for sleep and mood disorders, with potential applications for insomnia and depression. Analysts are less optimistic about Tasimelteon's potential than it is about Fanapt's. Fanapt is very interesting as it is entering a heavily contested anti-psychotic drug market that could make it very profitable. Nevertheless, VNDA's prescriptions continue to strengthen on a month-over-month basis adding to the companies overall long-term strength. As a result, I expect VNDA to rise to $14 a share, a total yield of 85%.

The two pharmaceutical plays above both have high ceilings, which make them risky plays. If you are the conservative investor I would stay clear of both plays, if you are to invest TEVA is the more stable play whereas VNDA has the larger upside.

Source: Top 2 Pharmaceutical Stocks Set to Soar