Interested in biotechnology stocks? Do you feel better knowing your favorite companies have enough cash to cover their operating expenses for a very long time? Do you prefer companies with strong profits? For a closer look at stocks of this nature, we ran a screen.
The Current Ratio is a liquidity ratio used to determine a company's financial health. The metric illustrates how easily a firm can pay back its short obligations all at once through current assets. A company that has a current ratio of one or less is generally a liquidity red flag. Now this doesn't mean the company will go bankrupt tomorrow, but it also doesn't bode well for the company and may indicate that it could have an issue paying back upcoming obligations.
The Quick ratio measures a company's ability to use its cash or assets to extinguish its current liabilities immediately. Quick assets include assets that presumably can be converted to cash at close to their book values. A company with a Quick Ratio of less than 1 cannot currently pay back its current liabilities. The quick ratio is more conservative than the Current Ratio because it excludes inventory from current assets, since some companies have difficulty turning their inventory into cash. If short-term obligations need to be paid off immediately, sometimes the current ratio would overestimate a company's short-term financial strength. In general, the higher the ratio, the greater the company's liquidity (i.e., the better able to meet current obligations using liquid assets).
The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time, this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.
Return on Assets (ROA) illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue, very few can make very large profits with little investment.
We first looked for biotechnology stocks. We then looked for companies with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). We then looked for businesses with strong profit margins (1-year operating margin>15%)(ROA [TTM]>10%). We did not screen out any market caps.
Do you think these stocks have what it takes to grow? Use our screened list as a starting point for your own analysis.
- Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)
Vertex Pharmaceuticals Incorporated has a Current Ratio of 4.02 and Quick Ratio of 3.66 and Operating Profit Margin of 20.58% and Return on Assets of 15.71%. The short interest was 3.50% as of 05/28/2012. Vertex Pharmaceuticals Incorporated engages in discovering, developing, manufacturing, and commercializing small molecule drugs for the treatment of serious diseases worldwide. Its products include telaprevir, a prescription medicine used for the treatment of patients with genotype 1 hepatitis C virus (HCV) infection; and Ivacaftor, a prescription medicine used for the treatment of cystic fibrosis. The company markets its products under the INCIVEK brand name in the United States and Canada; INCIVO brand in the United Kingdom, Germany, France, Sweden, Austria, Finland, Denmark, Switzerland, and Norway; KALYDECO brand in the United States; and TELAVIC brand in Japan.
- Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI)
Spectrum Pharmaceuticals, Inc. has a Current Ratio of 3.18 and Quick Ratio of 3.07 and Operating Profit Margin of 29.03% and Return on Assets of 31.68%. The short interest was 45.86% as of 05/28/2012. Spectrum Pharmaceuticals, Inc., a biotechnology company, engages in acquiring, developing, and commercializing prescription drug products primarily in the areas of hematology and oncology. It offers ZEVALIN, a prescribed form of cancer therapy which combines a source of radiation with an antibody; and FUSILEV for patients with osteosarcoma after high-dose methotrexate therapy, as well as to diminish the toxicity and counteract the effects of impaired methotrexate elimination or inadvertent overdose of folic acid antagonists. The company also develops apaziquone that is under Phase 3 clinical trials for non-muscle invasive bladder cancer; and belinostat, which is under Phase 2 registrational trial for relapsed or refractory peripheral T-cell lymphoma.
- Celgene Corporation (NASDAQ:CELG)
Celgene Corporation has a Current Ratio of 3.71 and Quick Ratio of 3.51 and Operating Profit Margin of 32.81% and Return on Assets of 14.50%. The short interest was 1.39% as of 05/28/2012. Celgene Corporation, a biopharmaceutical company, discovers, develops, and commercializes various therapies to treat cancer and immune-inflammatory related diseases primarily in the United States and Europe. The company's commercial stage products include REVLIMID, an oral immunomodulatory drug for the treatment of patients with multiple myeloma and myelodysplastic syndromes (MDS); VIDAZA, a pyrimidine nucleoside analog to treat various subtypes MDS and acute myeloid leukemia; and THALOMID for patients with multiple myeloma, and for the prevention and suppression of the cutaneous manifestation of erythema nodosum leprosum recurrence. It also offers ABRAXANE to treat metastatic breast cancer; and ISTODAX for the treatment of cutaneous and peripheral T-cell lymphoma.
- Immunomedics Inc. (NASDAQ:IMMU)
Immunomedics Inc. has a Current Ratio of 7.66 and Quick Ratio of 7.57 and Operating Profit Margin of 24.79% and Return on Assets of 27.16%. The short interest was 14.54% as of 05/28/2012. Immunomedics, Inc., a biopharmaceutical company, engages in the research, development, manufacture, and marketing of monoclonal, antibody-based products for the treatment of cancer, autoimmune, and other serious diseases in the United States and Europe. The company's products include epratuzumab, a Phase III clinical trail product for the treatment of systemic lupus erythematosus and non-Hodgkin's lymphoma; Veltuzumab, a Phase I/II clinical study completed product for the treatment of patients with non-Hodgkin's lymphoma, immune thrombocytopenic purpura, and chronic lymphocytic leukemia; Yttrium Y 90 Clivatuzumab tetraxetan, a humanized monoclonal antibody for pancreatic cancer that is in Phase Ib/II clinical trail; and Yttrium Y 90 epratuzumab tetraxetan, a Phase I/II clinical study product for patients with non-Hodgkin's lymphoma. Its early phase clinical trial products comprise Milatuzumab, a transmembrane protein product for antibody-drug conjugate therapy.
- Questcor Pharmaceuticals, Inc. (QCOR)
Questcor Pharmaceuticals, Inc. has a Current Ratio of 4.28 and Quick Ratio of 4.20 and Operating Profit Margin of 55.57% and Return on Assets of 46.09%. The short interest was 25.46% as of 05/28/2012. Questcor Pharmaceuticals, Inc., a biopharmaceutical company, provides prescription drugs for the treatment of multiple sclerosis, nephrotic syndrome, and infantile spasms indications.
- Obagi Medical Products, Inc. (NASDAQ:OMPI)
Obagi Medical Products, Inc. has a Current Ratio of 4.65 and Quick Ratio of 4.29 and Operating Profit Margin of 20.95% and Return on Assets of 20.81%. The short interest was 4.16% as of 05/28/2012. Obagi Medical Products, Inc., a specialty pharmaceutical company, develops, markets, and sells topical aesthetic and therapeutic prescription skin care systems. It offers Obagi Nu-Derm System, including prescription and OTC drugs that are used for the treatment of fine lines, wrinkles, acne, photo damage, hyperpigmentation, melasma, laxity, and skin sallowness; Obagi Condition and Enhance Systems that are used before and after surgical and non-surgical cosmetic procedures; Obagi-C Rx System comprises Vitamin C with 4% hydroquinone system to treat skin conditions resulting from sun damage and the oxidative damage of free radicals; and Professional-C products consisting of Vitamin C serums for the treatment of antioxidant protection, fine lines, wrinkles, and hyperpigmentation. The company also provides ELASTIderm Eye and Dcolletage, which increases the elasticity and skin tone of eyes, face, neckline, and chest, and the ELASTILash Eyelash Solution that enhances the appearance of thickness and fullness of eyelashes.
- Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN)
Alexion Pharmaceuticals, Inc. has a Current Ratio of 2.30 and Quick Ratio of 2.03 and Operating Profit Margin of 30.23% and Return on Assets of 12.23%. The short interest was 2.01% as of 05/28/2012. Alexion Pharmaceuticals, Inc., a biopharmaceutical company, engages in the innovation, development, and commercialization of life-transforming therapeutic products for treating patients with severe and ultra-rare disorders in the United States, Europe, Latin America, Japan, and the Asia Pacific. It focuses on developing products for the treatment of diseases in the areas of hematology, nephrology, neurology, metabolic disorders, oncology, and ophthalmology. The company offers Soliris (eculizumab), a therapeutic product for the treatment of patients with paroxysmal nocturnal hemoglobinuria (PNH), a blood disorder; and atypical hemolytic uremic syndrome (aHUS), an ultra-rare and life-threatening genetic disease.
- Osiris Therapeutics, Inc. (NASDAQ:OSIR)
Osiris Therapeutics, Inc. has a Current Ratio of 9.88 and Quick Ratio of 9.79 and Operating Profit Margin of 26.08% and Return on Assets of 15.78%. The short interest was 13.28% as of 05/28/2012. Osiris Therapeutics, Inc., a stem cell company, focuses on the development and marketing of therapeutic products to treat various medical conditions in the inflammatory, cardiovascular, orthopedic, and wound healing markets. It operates in two segments, Therapeutics and Biosurgery. The Therapeutics segment focuses on developing biologic stem cell drug candidates from a readily available and non-controversial source, adult bone marrow.
- Jazz Pharmaceuticals plc (NASDAQ:JAZZ)
Jazz Pharmaceuticals plc has a Current Ratio of 3.13 and Quick Ratio of 2.97 and Operating Profit Margin of 41.59% and Return on Assets of 24.93%. The short interest was 5.05% as of 05/28/2012. Jazz Pharmaceuticals Public Limited Company, a specialty biopharmaceutical company, focuses on the identification, development, and commercialization of pharmaceutical products to meet unmet medical needs. Its marketed products include Xyrem, a sodium oxybate oral solution for the treatment of cataplexy and excessive daytime sleepiness in patients with narcolepsy; FazaClo (clozapine, USP) LD and FazaClo HD products, which are orally disintegrating clozapine tablets for the treatment of resistant schizophrenia; Luvox CR extended-release capsules for the treatment of obsessive compulsive disorder; and Prialt, a non-opioid intrathecal analgesic for refractory severe chronic pain. The company also offers women's health and other products, such as Elestrin for moderate-to-severe vasomotor symptoms associated with menopause; Natelle and Gesticare prescription prenatal vitamins; Urelle for irritative voiding, as well as for inflammation, hypermotility, and pain that accompany lower urinary tract infections; Gastrocrom oral concentrate for mastocytosis; Parcopa for idiopathic Parkinson's disease; and AVC (sulfanilamide) cream to treat vulvovaginitis caused by Candida albicans, as well as Niravam for the management of anxiety disorder or the short-term relief of symptoms of anxiety, as well as for panic disorder with or without agoraphobia.
*Company profiles were sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.