Biotechnology is a sector that is rapidly expanding. Both new and established companies are presenting treatments, devices, and healthcare related technology to improve and save lives. There are many options for investors who are interested in growth opportunities. Today we focused on biotech stocks that have a high level of liquidity and notable growth projections. To reduce risk, it is important for a company to have both traits. When the two are paired, a company has the means to fund their strategic goals, make acquisitions, as well as continue development. The list below provides you with a place to start your research.
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.
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).
We first looked for biotechnology stocks. Next, we then screened for businesses with estimated high-growth, with 5-year projected EPS growth above 25%. We then looked for companies that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We did not screen out any market caps.
Do you think these stocks will trade at a higher valuation? Use our list along with your own analysis.
1) Anika Therapeutics Inc. (NASDAQ:ANIK)
Anika Therapeutics Inc. has a 5-Year Projected Earnings Per Share Growth Rate of 30.00%, a Current Ratio of 4.97, and a Quick Ratio of 4.26. The short interest was 5.03% as of 08/07/2012. Anika Therapeutics, Inc., together with its subsidiaries, develops, manufactures, and commercializes therapeutic products for tissue protection, healing, and repair. Its products are based on hyaluronic acid (HA), a naturally occurring biocompatible polymer found in the body. The company's products include ORTHOVISC, ORTHOVISC mini, and MONOVISC for the treatment of osteoarthritis of the knee and various other joints; Hyalograft C Autograft for cartilage regeneration; Hyalofast, a biodegradable support for human bone marrow mesenchymal stem cells; Hyalonect, a woven gauze used as a graft wrap; Hyaloss, HYAFF fibers used to mix blood/bone grafts to form a paste for bone regeneration; and Hyaloglide, an ACP gel used in tenolysis treatment.
2) China Biologic Products, Inc. (NASDAQ:CBPO)
China Biologic Products, Inc. has a 5-Year Projected Earnings Per Share Growth Rate of 30.00%, a Current Ratio of 3.50, and a Quick Ratio of 2.18. The short interest was 0.48% as of 08/07/2012. China Biologic Products, Inc., a 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) Corcept Therapeutics Incorporated (NASDAQ:CORT)
Corcept Therapeutics Incorporated has a 5-Year Projected Earnings Per Share Growth Rate of 30.00%, a Current Ratio of 11.98, and a Quick Ratio of 11.97. The short interest was 5.32% as of 08/07/2012. 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 Google Finance and Yahoo Finance. 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.