The aging baby-boomer demographic is a trend many investors are aware of, but not everyone knows how to seize the opportunity. Healthcare companies, with strong growth due to even stronger earnings, is one way to invest in the aging population trend. Today we focused on healthcare companies of this nature, and came up with an interesting list.
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.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 1-Year Expected EPS Growth Rate is an annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
We first looked for healthcare stocks. We then looked for companies with strong profit margins (1-year operating margin>15%)(ROA > 10%). We next screened for businesses that have expected earnings per share growth of more than 25 percent for next year(1-year projected EPS Growth Rate>25%). We did not screen out any market caps.
Do you think these stocks hold solid value? Please use our list to assist with your own analysis.
1) Forest Laboratories Inc. (FRX)
| Sector: | Healthcare |
| Industry: | Drug Manufacturers - Other |
| Market Cap: | $9.30B |
| Beta: | 0.66 |
Forest Laboratories Inc. has a Operating Profit Margin of 26.99%, a Return on Assets of 13.58%, and a 1-Year Projected Earnings Per Share Growth Rate of 108.86%. The short interest was 6.35% as of 07/01/2012. Forest Laboratories, Inc. develops, manufactures, and sells branded forms of ethical drug products primarily in the United States and Europe. It principally offers Namenda for the treatment of moderate and severe Alzheimer's disease; Bystolic for the treatment of hypertension; Savella for the management of fibromyalgia; Teflaro for the treatment of adults with skin and skin structure infections, and community-acquired bacterial pneumonia; Daliresp to reduce the risk of chronic obstructive pulmonary disease (COPD) exacerbations in patients with severe COPD; and Viibryd for the treatment of adults with major depressive disorder (MDD). The company has products under new drug application review by Food and Drug Administration comprising Aclidinium for the maintenance treatment of COPD; and Linaclotide for the treatment of constipation-predominant irritable bowel syndrome and chronic constipation.
2) Progenics Pharmaceuticals Inc. (PGNX)
| Sector: | Healthcare |
| Industry: | Biotechnology |
| Market Cap: | $331.15M |
| Beta: | 1.41 |
Progenics Pharmaceuticals Inc. has a Operating Profit Margin of 23.82%, a Return on Assets of 24.11%, and a 1-Year Projected Earnings Per Share Growth Rate of 369.20%. The short interest was 4.82% as of 07/01/2012. Progenics Pharmaceuticals, Inc. engages in research and development of biotechnology product candidates in the areas of oncology, virology, supportive care, and gastroenterology worldwide. The company offers RELISTOR (methylnaltrexone bromide), a subcutaneous injection for the treatment of opioid induced constipation (OIC) in patients with advanced illnesses, such as cancer. It is also developing RELISTOR, a subcutaneous injection for the treatment of OIC in patients with non-cancer pain; and RELISTOR-Oral, which has completed Phase III testing for the treatment of OIC in patients with non-cancer pain.
3) Elan Corporation, plc (ELN)
| Sector: | Healthcare |
| Industry: | Drug Delivery |
| Market Cap: | $8.63B |
| Beta: | 1.01 |
Elan Corporation, plc has a Operating Profit Margin of 57.26%, a Return on Assets of 25.47%, and a 1-Year Projected Earnings Per Share Growth Rate of 950.00%. The short interest was 1.81% as of 07/01/2012. Elan Corporation, plc operates as a neuroscience-based biotechnology company in the United States, Ireland, and internationally. It engages in research, development, and commercial activities primarily in the areas of Alzheimer's disease, Parkinson's disease, and multiple sclerosis (MS). The company offers Tysabri, an alpha-4 integrin inhibitor primarily for the treatment of MS.
4) POZEN Inc. (POZN)
| Sector: | Healthcare |
| Industry: | Drug Manufacturers - Other |
| Market Cap: | $186.40M |
| Beta: | 1.36 |
POZEN Inc. has a Operating Profit Margin of 47.11%, a Return on Assets of 47.90%, and a 1-Year Projected Earnings Per Share Growth Rate of 107.60%. The short interest was 19.79% as of 07/01/2012. POZEN Inc., a pharmaceutical company, develops products for the treatment of acute and chronic pain, and other pain-related conditions in the United States. Its products include Treximet for acute treatment of migraine attacks with or without aura in adults; and VIMOVO for the relief of the signs and symptoms of osteoarthritis, rheumatoid arthritis, and ankylosing spondylitis, as well as to decrease the risk of developing gastric ulcers in patients at risk of developing non-steroidal anti-inflammatory drugs (NSAID)-associated gastric ulcers. The company also develops PA32540, a product candidate, which is under 2 pivotal Phase 3 trials for the secondary prevention of cardiovascular disease in patients at risk for gastric ulcers.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Google Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
