Interested in healthcare stocks? Looking for ways to dig deeper into a company's profitability? Are you a momentum investor? If so, we ran a screen keeping this idea in mind.
Return on Equity [ROE] is one way to identify great potential names relative to profitability. This ratio illustrates the percentage return on shareholder equity. As well, this metric segments the company into operational efficiency, asset use efficiency, and financial leverage. Why does this matter? Simply put, it allows investors to get a real picture of how the company is generating these returns and helps identify parts of the company that may be underperforming.
We first looked for Healthcare stocks that have been able to maintain a sound level of profitability for shareholders (ROE [TTM]>30%) and that are currently trading at no less than 20% below their 52-week highs. Why you wonder? The number shows these firms are doing something right consistently. The real question is "as an investor do you think the firms listed here have room to go even higher?". We did not screen out any market caps.
Do you think these healthcare stocks will continue to see such strong profitability? Use this list as a starting-off point for your own analysis.
1) Express Scripts Inc. (ESRX)
| Sector: | Healthcare |
| Industry: | Health Care Plans |
| Market Cap: | $29.90B |
| Beta: | 1.06 |
Express Scripts Inc. has a Return on Equity of 41.97% and trading below it's 52 Week High by -6.68%. The short interest was 11.99% as of 04/25/2012. Express Scripts Holding Company provides a range of pharmacy benefit management (PBM) services in North America. The company offers healthcare management and administration services on behalf of its clients, which comprise health maintenance organizations, health insurers, third-party administrators, employers, union-sponsored benefit plans, workers' compensation plans, and government health programs. Its integrated PBM services include retail network pharmacy management and retail drug card programs; home delivery services; specialty benefit services; patient care contact centers; benefit plan design and consultation; drug formulary management, compliance, and therapy management programs; information reporting and analysis programs; rebate programs; electronic claims processing and drug utilization review; administration of a group purchasing organization; consumer health and drug information; bio-pharma services, including reimbursement and customized logistics solutions; improved health outcomes through personalized medicine and application of pharmacogenomics; and assistance programs for low-income patients. The company is also involved in the distribution of pharmaceuticals and medical supplies to providers and clinics; and healthcare administration and implementation of consumer-directed healthcare solutions.
2) Akorn, Inc. (AKRX)
| Sector: | Healthcare |
| Industry: | Drugs - Generic |
| Market Cap: | $1.13B |
| Beta: | 1.14 |
Akorn, Inc. has a Return on Equity of 35.12% and trading below it's 52 Week High by -9.55%. The short interest was 15.99% as of 04/25/2012. Akorn, Inc. engages in the manufacture and marketing of diagnostic and therapeutic ophthalmic pharmaceuticals products, niche hospital drugs, and injectable pharmaceuticals in the United States and internationally. It offers products in various specialty areas, including ophthalmology, antidotes, anti-infectives, pain management, anesthesia, and vaccines. The company's Ophthalmic segment markets diagnostic products, including mydriatics and cycloplegics, anesthetics, topical stains, gonioscopic solutions, angiography dyes, and others primarily for use in the office setting.
3) Jazz Pharmaceuticals plc (JAZZ)
| Sector: | Healthcare |
| Industry: | Biotechnology |
| Market Cap: | $2.55B |
| Beta: | 2.07 |
Jazz Pharmaceuticals plc has a Return on Equity of 111.92% and trading below it's 52 Week High by -14.54%. The short interest was 4.01% as of 04/25/2012. Jazz Pharmaceuticals Public Limited Company, a 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.
4) Gilead Sciences Inc. (GILD)
| Sector: | Healthcare |
| Industry: | Biotechnology |
| Market Cap: | $39.85B |
| Beta: | 0.44 |
Gilead Sciences Inc. has a Return on Equity of 44.49% and trading below it's 52 Week High by -6.96%. The short interest was 1.38% as of 04/25/2012. Gilead Sciences, Inc., a biopharmaceutical company, discovers, develops, and commercializes human therapeutics for the treatment of life threatening diseases worldwide. Its products include Atripla, Truvada, Viread, Complera/Eviplera, and Emtriva for the treatment of human immunodeficiency virus (HIV) infection in adults; Viread and Hepsera oral formulations for the treatment of chronic hepatitis B; Letairis, an oral formulation for pulmonary arterial hypertension; Ranexa, a tablet for chronic angina; Lexiscan/Rapiscan, a test that detects and characterizes coronary artery disease; Cayston, an inhaled antibiotic for the treatment of respiratory systems in cystic fibrosis patients; Tamiflu, a capsule for the treatment and prevention of influenza A and B. The company also provides other products, such as AmBisome, an antifungal agent to treat serious invasive fungal infections; Vistide, an antiviral medication for the treatment of cytomegalovirus retinitis in patients with AIDS; and Macugen, an anti-angiogenic oligonucleotide to treat neovascular macular degeneration.
*Company profiles were sourced from Finviz. 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.