While I spend a good deal of time studying a stock's fundamentals and technicals when I am advising clients or investing for myself, I also like to compare notes with others. One good way to do that involves analyzing institutional ownership of that stock. Institutional involvement in a company gives me an idea of the faith that other experts have in the company's future plans. It also helps in marketing the stock and lets retail investors ride piggyback on top analysts.
Many institutional owners love solid healthcare stocks. I believe that is partly due to many investors' inherent belief in the strength of good healthcare stocks. Here's a list of healthcare stocks that have a huge percentage of institutional ownership.
Covidien (COV): This stock is on the upswing and is currently trading at $56.96, quite close to its 52 weeks high of $57.86. The company has market float of 480.10 million shares and 92 percent of its share capital is held by institutions.
Covidien had plenty of positive news to share lately. It received FDA 510K clearance for its LigaSure small jaw instrument. This instrument is meant to be used for ear, nose and throat surgeries. It has also received the nod for its reusable iDrive stapling system. The system is expected to be marketed in the fourth quarter of this year. Riding on these positive news, the company is showing better than average revenue growth rate. It also boasts an impressive 63 percent gross profit margin. The stock is trading at P/E ratio of 14.60 and its beta is 0.84. It has over $27 billion in market capitalization.
Valeant Pharmaceuticals Int. (VRX): The company recently solidified its position in the dermatology market with the purchase of Medicis. Valeant Pharmaceuticals paid $2.6 billion in cash to purchase Medicis. With this acquisition, the company now has access to one of the biggest dermatology franchises in the country. Medicis also has a robust sales network which can now be used by Valeant.
Valeant is currently trading at $58.84, down 0.52 percent from its previous close. The stock recently hit its 52 week high of $61.11 while its lowest trading point stands at $32.05. With a market capitalization of $17.97 billion, the company has a solid position. Valeant seems to be well-liked by institutions since 94 percent of its stock is owned by institutions. The future outlook for the stock looks promising as its new acquisition is likely to reap synergistic benefits for the company.
Thermo Fisher Scientific Inc. (TMO): Thermo Fisher Scientific is clearly many money managers' darling stock. It gets constant positive recommendations and 90 percent of the company stock is owned by institutional investors.
The stock has appreciated about 30 percent in the past 52 weeks. Thermo Fisher Scientific recently bought 22 acres of land from Union Pacific (UNP). The land is located near Tesla Motors' (TSLA) manufacturing plant and it probably will be used for setting up a new company office. The stock is currently trading at $59.06, close to its 52 week high of $59.37. The stock's lowest price point in the past year stood at $43.06. It has a solid market capitalization of $21.59 billion and is trading at P/E ratio of 19.59, which is slightly higher than the industry average. However, on the basis of good revenue growth and financial stability, the stock remains a good pick.
Amgen Inc. (AMGN): Amgen is yet another healthcare stock with robust institutional backing and an impressive pricing trend. The stock is trading at $84.07 in early trade. It has oscillated between $52.85 and $85.28 in the past 52 weeks. The stock has been upgraded by UBS to Buy, up from Neutral. Its price target has also been raised from $80 to $96. The company has $770.77 million shares outstanding in the market and 80 percent of its capital is owned by institutions.
AMGN is trading at the P/E ratio of 17.93, which is in line with the industrial average, and its beta is 0.45. The company may face competition from Teva (TEVA), which has recently obtained FDA approval for its generic version of Amgen's Neupogen. However, market experts are of the view that the two medicines are not exactly fungible and hence Amgen might not face much competition from the new drug.
Merck & Co. Inc. (MRK): Merck issued bonds worth $2.5 billion yesterday and led the corporate bond market to have its busiest day in the last two years. The company sold the bonds in three parts and had Bank of America, JPMorgan and Citigroup as its joint bookrunning managers. Merck is trading at $44.48 and has a beta of 0.38. Merck has 3.05 billion shares outstanding in the market and 75 percent of its capital is under institutional ownership. The company is also rejigging its cash management processes and is likely to benefit from its financial flexibility.