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Biotechnology stocks are becoming a favorite among investors looking to expand their options. Especially of interest are mid-level companies that are already producing positive earnings. In today's list, we have screened for biotechnology stocks in this range that demonstrate healthy profitability and have plenty of room to grow.

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

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 5-Year Expected EPS Growth Rate is a long-term annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.

We first looked for biotechnology stocks. We next screened for businesses that have been able to retain strong profit margins on the bottom line (Net Margin [TTM]>10%)(ROA > 10%). We then screened for businesses with estimated high-growth, with 5-year projected EPS growth above 25%. We did not screen out any market caps.

Do you think these stocks are undervalued and have room to trade higher? Please use our list to assist with your own analysis.

1) Jazz Pharmaceuticals plc (NASDAQ:JAZZ)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$2.66B
Beta:2.04

Jazz Pharmaceuticals has a Net Margin of 39.67%, a Return on Assets of 24.93%, and a 5-Year Projected Earnings Per Share Growth Rate of 25.68%. The short interest was 8.25% as of 07/24/2012. The 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.

2) China Biologic Products, Inc. (NASDAQ:CBPO)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$271.36M
Beta:1.38

China Biologic Products has a Net Margin of 23.68%, a Return on Assets of 16.48%, and a 5-Year Projected Earnings Per Share Growth Rate of 30.00%. The short interest was 0.47% as of 07/24/2012. This biopharmaceutical company, through its subsidiaries, engages in the research, development, manufacture, and sale of human plasma-based biopharmaceutical products to hospitals and inoculation centers in the People's Republic of China. It offers Human Albumin for the treatment of shock caused by blood loss trauma or burn; raised intracranial pressure caused by hydrocephalus or trauma; oedema or ascites caused by hepatocirrhosis and nephropathy; and neonatal hyperbilirubinemia, as well as for the prevention and treatment of low-density-lipoproteinemia. The company also offers Human Hepatitis B Immunoglobulin for the prevention of measles and contagious hepatitis; Human Immunoglobulin and Human Immunoglobulin for Intravenous Injection products for original immunoglobulin deficiency, secondary immunoglobulin deficiency, and auto-immune deficiency diseases; and Thymopolypeptides Injection that is used in the treatment of various original and secondary T-cell deficiency syndromes, auto-immune deficiency diseases, and a range of cell immunity deficiency diseases, as well as assists in the treatment for tumors.

3) Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN)

Sector:Healthcare
Industry:Biotechnology
Market Cap:$18.91B
Beta:0.59

Alexion Pharmaceuticals has a Net Margin of 22.49%, a Return on Assets of 12.23%, and a 5-Year Projected Earnings Per Share Growth Rate of 37.32%. The short interest was 3.02% as of 07/24/2012. Alexion 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.

*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.

Source: 3 Profit-Generating Biotechnology Stocks Poised For Growth