When we are curious about the upcoming weather, most of us turn to our smart phones to give us the five day forecast. When it comes to stocks, it is a little more complicated to know what the future will bring. Reviewing projected EPS growth rates can be an informative place to start, especially when you take into consideration current trends and how that impacts certain industries. For our scan today, we focused on the healthcare industry because as the baby boomer population ages, the demand for health related products, services and devices will only increase. To find companies that have expansion in mind for the near future, we focused on those with projected EPS growth rates above 25% for the next year. Additionally, all of the healthcare companies listed below have pulled in impressive profits over the past year. Take a look below to see if any of these healthcare stocks appeal to you.
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.
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 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 looked for businesses with strong profit margins (1-year operating margin>15%)(ROA > 10%). We next screened for businesses that are considered high-growth, with 1-year projected EPS growth above 25%. We did not screen out any market caps.
Do you think these stocks have strong operations? Use our list to help with your own analysis.
1) Elan Corporation, plc (ELN)
|Operating Profit Margin||58.94%|
|Return on Assets||26.87%|
|1-Year Projected Earnings Per Share Growth Rate||300.00%|
Elan Corporation, plc operates as a neuroscience-based biotechnology company in the United States, Ireland, and internationally. It engages in research, development, and commercial activities primarily in the areas of Alzheimer's disease, Parkinson's disease, and multiple sclerosis. Elan Corporation, plc was founded in 1969 and is headquartered in Dublin, Ireland.
2) Alexion Pharmaceuticals, Inc. (ALXN)
|Operating Profit Margin||31.05%|
|Return on Assets||10.75%|
|1-Year Projected Earnings Per Share Growth Rate||39.15%|
Alexion Pharmaceuticals, Inc., a biopharmaceutical company, 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. Alexion Pharmaceuticals, Inc. was founded in 1992 and is headquartered in Cheshire, Connecticut.
3) Vertex Pharmaceuticals Incorporated (VRTX)
|Operating Profit Margin||25.03%|
|Return on Assets||21.52%|
|1-Year Projected Earnings Per Share Growth Rate||42.86%|
Vertex Pharmaceuticals Incorporated engages in discovering, developing, manufacturing, and commercializing small molecule drugs for the treatment of serious diseases worldwide. The company was founded in 1989 and is headquartered in Cambridge, Massachusetts.
4) Forest Laboratories Inc. (FRX)
|Industry||Drug Manufacturers - Other|
|Operating Profit Margin||22.74%|
|Return on Assets||10.58%|
|1-Year Projected Earnings Per Share Growth Rate||129.85%|
Forest Laboratories, Inc. develops, manufactures, and sells branded forms of ethical drug products primarily in the United States and Europe. It principally offers Namenda for the treatment of moderate and severe Alzheimer's disease; Bystolic for the treatment of hypertension; Savella for the management of fibromyalgia; Teflaro for the treatment of adults with skin and skin structure infections, and community-acquired bacterial pneumonia; Daliresp to reduce the risk of chronic obstructive pulmonary disease exacerbations in patients with severe COPD; and Viibryd for the treatment of adults with major depressive disorder. The company was founded in 1956 and is headquartered in New York, New York.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 10/03/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.