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One way to gauge the profitability of a firm is by comparing its margins to its industry averages. Companies with higher margins are taking a larger percentage of sales as profits, indicating higher profitability and a greater control of costs.

We ran a screen on stocks from the healthcare sector for those that appear undervalued to earnings growth, with PEG below 1. We screened these stocks for those that are highly profitable, beating their industry averages on gross, operating and pretax margins.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬



We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

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Do you think these companies are performing well? Use this list as a starting point for your own analysis.

List sorted by market cap.

1. Unitedhealth Group, Inc. (NYSE:UNH): Provides healthcare services in the United States. Market cap of $49.78B. PEG at 0.89. TTM gross margin at 24.76% vs. industry gross margin at 20.97%. TTM operating margin at 8.61% vs. industry operating margin at 8.43%. TTM pretax margin at 7.92% vs. industry pretax margin at 6.91%. The stock has gained 34.99% over the last year.

2. Aetna Inc. (NYSE:AET):
Operates as a diversified healthcare benefits company in the United States. Market cap of $14.33B. PEG at 0.71. TTM gross margin at 28.86% vs. industry gross margin at 20.97%. TTM operating margin at 9.19% vs. industry operating margin at 8.43%. TTM pretax margin at 8.28% vs. industry pretax margin at 6.91%. The stock has gained 27.41% over the last year.

3. Medicines Co. (NASDAQ:MDCO):
Provides various medicines to hospitals for advancing the treatment of critical care patients primarily in the United States and Europe. Market cap of $800.43M. PEG at 0.69. TTM gross margin at 70.48% vs. industry gross margin at 67.38%. TTM operating margin at 14.38% vs. industry operating margin at 14.23%. TTM pretax margin at 18.63% vs. industry pretax margin at 9.39%. The stock has had a couple of great days, gaining 5.93% over the last week.

4. USANA Health Sciences Inc. (NYSE:USNA):
Develops, manufactures, distributes and sells nutritional and personal care products worldwide. Market cap of $411.70M. PEG at 0.52. TTM gross margin at 82.02% vs. industry gross margin at 71.34%. TTM operating margin at 13.51% vs. industry operating margin at 12.59%. TTM pretax margin at 13.46% vs. industry pretax margin at 9.70%. The stock is a short squeeze candidate, with a short float at 25.53% (equivalent to 15.46 days of average volume). The stock has lost 37.45% over the last year.

5. Cumberland Pharmaceuticals, Inc. (NASDAQ:CPIX):
Engages in the acquisition, development and commercialization of branded prescription products for the hospital acute care and gastroenterology markets. Market cap of $112.50M. PEG at 0.46. TTM gross margin at 92.64% vs. industry gross margin at 67.38%. TTM operating margin at 19.42% vs. industry operating margin at 14.23%. TTM pretax margin at 17.85% vs. industry pretax margin at 9.39%. The stock is a short squeeze candidate, with a short float at 10.64% (equivalent to 16.66 days of average volume). It has been a rough couple of days for the stock, losing 7.69% over the last week.

6. China Nuokang Bio-Pharmaceutical Inc. (NASDAQ:NKBP): Focuses on the research, development, manufacture, marketing and sale of hospital-based medical products in China. Market cap of $99.94M. PEG at 0.76. TTM gross margin at 87.80% vs. industry gross margin at 67.38%. TTM operating margin at 19.55% vs. industry operating margin at 14.23%. TTM pretax margin at 15.90% vs. industry pretax margin at 9.39%. The stock has gained 3.99% over the last year.

*Profitability data sourced from Fidelity, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 6 Undervalued Healthcare Stocks With Impressive Profitability