Healthcare is an industry that is top of the mind for many. There are plentiful opportunities for investors, but with so many choices it can be overwhelming. We ran a filter to find companies that have a notable amount of cash on hand, as well as those that are forecast to grow in the foreseeable future. If these companies use their reserves responsibly, they can realize and even surpass the expected growth. The list below is a great place to start your research.
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).
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 screened for businesses with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2). From here, we then looked for companies with projected high growth, measured by 1-year projected EPS growth above 25%. We did not screen out any market caps.
Do you think these stocks will break through to new highs? Use our list to help with your own analysis.
1) SurModics Inc. (SRDX)
SurModics Inc. has a Current Ratio of 14.79, a Quick Ratio of 14.16, and a 1-Year Projected Earnings Per Share Growth Rate of 32.08%. The short interest was 2.94% as of 07/30/2012. SurModics, Inc. provides drug delivery and surface modification technologies to the healthcare industry. The company offers surface modification coating technologies to enhance access, deliverability, and predictable deployment of medical devices, as well as drug delivery coating technologies to provide site-specific drug delivery from the surface of a medical device for the coronary, peripheral, neuro-vascular, and urology markets. It also provides a range of drug delivery technologies for injectable therapeutics, including microparticles, nanoparticles, and implants addressing a range of clinical applications, such as ophthalmology, oncology, dermatology, and neurology.
2) Cumberland Pharmaceuticals, Inc. (CPIX)
|Industry:||Drug Manufacturers - Other|
Cumberland Pharmaceuticals, Inc. has a Current Ratio of 14.01, a Quick Ratio of 13.03, and a 1-Year Projected Earnings Per Share Growth Rate of 38.24%. The short interest was 12.41% as of 07/30/2012. Cumberland Pharmaceuticals Inc., a specialty pharmaceutical company, engages in the acquisition, development, and commercialization of branded prescription products for the hospital acute care and gastroenterology markets primarily in the United States. The company's principal products include Acetadote, an intravenous formulation of N-acetylcysteine indicated for the treatment of acetaminophen poisoning; Caldolor, an intravenous formulation of ibuprofen for the treatment of pain and fever; and Kristalose, a prescription laxative administered orally for the treatment of constipation. It is also developing Hepatoren injection, which is in Phase II clinical development for the treatment of hepatorenal syndrome.
3) Immunogen Inc. (IMGN)
Immunogen Inc. has a Current Ratio of 12.29, a Quick Ratio of 12.22, and a 1-Year Projected Earnings Per Share Growth Rate of 25.80%. The short interest was 10.31% as of 07/30/2012. ImmunoGen, Inc. engages in the research and development of targeted therapeutics for the treatment of cancer using cancer biology, monoclonal antibodies, and highly potent cell-killing agents. The company develops its products using its Targeted Antibody Payload (TAP) technology. Its product candidates include Trastuzumab emtansine (T-DM1), a Phase III clinical trial product for HER2+ breast cancer; lorvotuzumab mertansine (IMGN901), a Phase I clinical trial product, which targets CD56 found on small-cell lung cancer, Merkel cell carcinoma, multiple myeloma, ovarian cancers, carcinoid tumors, and other cancers of neuroendocrine origin; IMGN529, a pre-investigational new drug stage drug for CD37+ B-cell malignancies, such as non-Hodgkin's lymphoma; and IMGN853, a preclinical stage product for cancers that overexpress folate receptor 1, including ovarian cancer.
4) MELA Sciences, Inc. (MELA)
|Industry:||Medical Instruments & Supplies|
MELA Sciences, Inc. has a Current Ratio of 15.14, a Quick Ratio of 14.88, and a 1-Year Projected Earnings Per Share Growth Rate of 50.50%. The short interest was 23.19% as of 07/30/2012. MELA Sciences, Inc., a medical device company, focuses on the design, development, and commercialization of a non-invasive point-of-care instrument to aid in the detection of melanoma under the MelaFind brand name. The company's MelaFind system consists of a hand-held component that employs high precision optics and multi-spectral illumination; a proprietary database of pigmented skin lesions; and lesion classifiers, which are mathematical algorithms that extract lesion feature information and classify lesions. Its hand-held component emits light of multiple wavelengths to capture digital data from clinically atypical pigmented skin lesions, which is then analyzed utilizing classification algorithms trained at its proprietary database of melanomas and benign lesions to provide information to assist in the management of the patient's disease, including information useful in the decision of whether to biopsy the lesion.
5) QLT Inc. (QLTI)
QLT Inc. has a Current Ratio of 21.52, a Quick Ratio of 21.21, and a 1-Year Projected Earnings Per Share Growth Rate of 28.40%. The short interest was 1.83% as of 07/30/2012. QLT Inc., a biotechnology company, engages in the development and commercialization of ocular products that address the unmet medical needs of patients and clinicians. It offers Visudyne that utilizes light-activated photodynamic therapy to treat the eye disease known as wet age related macular degeneration. Visudyne is also used for the treatment of subfoveal choroidal neovascularization secondary to pathologic myopia, severe near-sightedness, and presumed ocular histoplasmosis.
6) VIVUS Inc. (VVUS)
VIVUS Inc. has a Current Ratio of 25.92, a Quick Ratio of 25.70, and a 1-Year Projected Earnings Per Share Growth Rate of 169.90%. The short interest was 15.32% as of 07/30/2012. VIVUS, Inc., a biopharmaceutical company, is developing therapies to address obesity, sleep apnea, diabetes, and male sexual health. Its lead investigational product, Qnexa, has completed Phase 3 clinical trials for the treatment of obesity. Qnexa is also in Phase 2 clinical development for the treatment of type 2 diabetes and obstructive sleep apnea.
7) Corcept Therapeutics Incorporated (CORT)
Corcept Therapeutics Incorporated has a Current Ratio of 11.98, a Quick Ratio of 11.97, and a 1-Year Projected Earnings Per Share Growth Rate of 79.50%. The short interest was 5.32% as of 07/30/2012. Corcept Therapeutics Incorporated, a pharmaceutical company, engages in the discovery, development, and commercialization of drugs for the treatment of severe metabolic and psychiatric disorders. It focuses on disorders that are associated with a steroid hormone called cortisol. The company focuses on commercializing Korlym (mifepristone) 300 mg Tablet, a once-daily oral medication for treatment of hyperglycemia secondary to hypercortisolism in adult patients with endogenous Cushing's syndrome, who have type 2 diabetes mellitus or glucose intolerance and have failed surgery or are not candidates for surgery.
*Company profiles were sourced from Finviz. Financial data was sourced from Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.