5 Analyst-Backed Healthcare Small Caps Commanding Strong Profits

by: ZetaKap

The healthcare industry is ripe with investment potential, but where should you start your search for stocks? One great place to look is among the healthcare stocks that can continually bring in profits from multiple sources, and that are also receiving some of the highest analyst recommendations in the industry. If stocks with these traits pique your interest, you will probably like the list of healthcare companies that we came up with today.

The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability.

Net Margin = Net Income/Total Revenue

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.

We first looked for healthcare stocks. We then looked for companies that analysts rate as "Strong Buy" (mean recommendation < 2). From here, we then looked for companies that have achieved strong bottom line profitability (Net Margin [TTM]>10%)(1-year operating margin>15%). We did not screen out any market caps.

Do you think these stocks failed to price their value accurately? Use our list to help with your own analysis.

1) Immunomedics Inc. (IMMU)

Sector: Healthcare
Industry: Biotechnology
Market Cap: $269.10M
Beta: 1.68

Immunomedics Inc. has a Analysts' Rating of 1.20, a Net Margin of 24.47%, and a Operating Profit Margin of 24.79%. The short interest was 14.45% as of 07/15/2012. 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.

2) BioSpecifics Technologies Corp. (BSTC)

Sector: Healthcare
Industry: Biotechnology
Market Cap: $127.00M
Beta: 0.43

BioSpecifics Technologies Corp. has a Analysts' Rating of 1.50, a Net Margin of 30.13%, and a Operating Profit Margin of 52.00%. The short interest was 3.99% as of 07/15/2012. Biospecifics Technologies Corp., a biopharmaceutical company, involves in the development of an injectable collagenase for various indications. It has a development and license agreement with Auxilium Pharmaceuticals, Inc. for injectable collagenase for clinical indications in Dupuytren's contracture, Peyronie's disease, and frozen shoulder.

3) Mesa Laboratories Inc. (MLAB)

Sector: Healthcare
Industry: Medical Instruments & Supplies
Market Cap: $155.24M
Beta: 0.36

Mesa Laboratories Inc. has a Analysts' Rating of 1.00, a Net Margin of 19.99%, and a Operating Profit Margin of 31.49%. The short interest was 3.99% as of 07/15/2012. Mesa Laboratories, Inc. designs, manufactures, and markets instruments and disposable products utilized primarily in healthcare, pharmaceutical, food and beverage, medical device, and petrochemical industries. The company offers DATATRACE data loggers that are used in critical manufacturing, quality control, and validation applications to measure temperature, humidity, and pressure inside a process or inside a product during manufacturing; medical meters and calibration solutions, which are used for quality control in dialysis clinics and dialysis machine manufacturing operations; Torqo torque testing systems that are used to measure bottle cap tightness in the beverage and pharmaceutical industries; and Nusonics concentration analyzers, pipeline interface detectors, and flow meter products, which are used in the chemical, food, pharmaceutical, and plastics industries. It also provides biological indicators and chemical indicators used to assess the effectiveness of sterilization processes, including steam, gas, hydrogen peroxide, and radiation under the Mesa, Apex, SGM Biotech, and Raven brands.

4) Questcor Pharmaceuticals, Inc. (QCOR)

Sector: Healthcare
Industry: Biotechnology
Market Cap: $2.72B
Beta: 0.32

Questcor Pharmaceuticals, Inc. has a Analysts' Rating of 1.40, a Net Margin of 38.55%, and a Operating Profit Margin of 55.57%. The short interest was 26.66% as of 07/15/2012. Questcor Pharmaceuticals, Inc., a biopharmaceutical company, provides prescription drugs for the treatment of multiple sclerosis, nephrotic syndrome, and infantile spasms indications.

5) Trinity Biotech plc (TRIB)

Sector: Healthcare
Industry: Diagnostic Substances
Market Cap: $272.64M
Beta: 1.43

Trinity Biotech plc has a Analysts' Rating of 1.30, a Net Margin of 20.32%, and a Operating Profit Margin of 20.61%. The short interest was 1.86% as of 07/15/2012. Trinity Biotech plc acquires, develops, manufactures, distributes, and sells diagnostic test kits and instrumentation for the clinical laboratory and point-of-care segments of the diagnostic market. It offers clinical laboratory products, including diagnostic tests and instrumentation, which detect autoimmune, infectious, and sexually transmitted diseases; diabetes and hemoglobin disorders; and disorders of the liver and intestine. The company also provides UniGold HIV, a point of care diagnostic test, which are carried out in the presence of the patient to diagnose the presence of HIV antibodies in the patient.

*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Yahoo Finance.

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