Everyone knows that the baby-boomer generation is retiring, but not every investor knows of smart ways to cash in on it. Healthcare companies, with strong track records of profitability, is one way to invest in the changing population model. Today we focused on healthcare companies of this nature, only taking those also have analyst recommendation, and we came up with a rather interesting list.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.
Return on Equity [ROE] is one way to identify great potential names relative to profitability. This ratio illustrates the percentage return on shareholder equity. As well, this metric segments the company into operational efficiency, asset use efficiency, and financial leverage. Why does this matter? Simply put, it allows investors to get a real picture of how the company is generating these returns and helps identify parts of the company that may be underperforming.
We first looked for healthcare stocks. We then looked for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). We then screened for businesses that have strong profitability (1-year fiscal EPS Growth Rate>10%)(ROE [TTM]>30%). We did not screen out any market caps.
Do you think these stocks deserve to trade higher? Use our screened list as a starting point for your own analysis.
1) SIGA Technologies, Inc. (SIGA)
SIGA Technologies, Inc. has a Analysts' Rating of 2.00, a Earnings Per Share Growth Rate of 140.27%, and a Return on Equity of 57.76%. The short interest was 20.36% as of 07/03/2012. SIGA Technologies, Inc., a pharmaceutical company, engages in the development and commercialization of pharmaceutical solutions for smallpox, Ebola, dengue, Lassa fever, and other dangerous viruses. Its lead product is ST-246, an orally administered antiviral drug that targets orthopoxviruses. The company also has two drug series in the pre-clinical development stage against four serotypes of virus for dengue disease.
2) Momenta Pharmaceuticals Inc. (MNTA)
Momenta Pharmaceuticals Inc. has a Analysts' Rating of 2.10, a Earnings Per Share Growth Rate of 337.21%, and a Return on Equity of 35.45%. The short interest was 12.15% as of 07/03/2012. Momenta Pharmaceuticals, Inc., a biotechnology company, specializes in the structural characterization, process engineering, and biologic systems analysis of complex molecules. These complex molecules include polysaccharides, polypeptides, and proteins and antibodies. Its technologies are used to develop a product portfolio of complex generic, follow-on biologic, and novel therapeutics.
3) Baxter International Inc. (BAX)
|Industry:||Medical Instruments & Supplies|
Baxter International Inc. has a Analysts' Rating of 2.20, a Earnings Per Share Growth Rate of 62.36%, and a Return on Equity of 33.32%. The short interest was 0.95% as of 07/03/2012. Baxter International Inc., through its subsidiaries, develops, manufactures, and markets products for people with hemophilia, immune disorders, infectious diseases, kidney disease, trauma, and other chronic and acute medical conditions. The company operates in two segments, BioScience and Medical Products. The BioScience segment processes recombinant and plasma-based proteins to treat hemophilia and other bleeding disorders; plasma-based therapies to treat immune deficiencies, alpha-1 antitrypsin deficiency, burns and shock, and other chronic and acute blood-related conditions; products for regenerative medicine, such as biosurgery products; and certain vaccines.
4) Exelixis, Inc. (EXEL)
Exelixis, Inc. has a Analysts' Rating of 2.20, a Earnings Per Share Growth Rate of 168.19%, and a Return on Equity of 242.25%. The short interest was 16.62% as of 07/03/2012. Exelixis, Inc., a biotechnology company, engages in developing small molecule therapies for the treatment of cancer. Its focuses on developing cabozantinib product candidate that inhibits MET, VEGFR2, and RET proteins, which are key drivers of tumor growth, vascularization, and/or metastasis. The cabozantinib is in Phase III clinical trial for the treatment for medullary thyroid cancer.
5) Novo Nordisk A/S (NVO)
|Industry:||Drug Manufacturers - Other|
Novo Nordisk A/S has a Analysts' Rating of 2.30, a Earnings Per Share Growth Rate of 21.90%, and a Return on Equity of 45.95%. The short interest was 0.52% as of 07/03/2012. Novo Nordisk A/S, a healthcare company, engages in the discovery, development, manufacture, and marketing of pharmaceutical products in Denmark and internationally. The company operates in two segments, Diabetes Care and Biopharmaceuticals. The Diabetes care segment covers insulins, obesity, oral antidiabetic drugs, and other protein-related products and projects comprising glucagon and protein-related delivery systems, as well as GLP-1 analogue.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.