10 Healthcare Stocks With Excellent Growth Prospects

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The following is a list of healthcare stocks that have excellent growth prospects, with higher projected EPS growth rates than their industry competitors.

In addition, all of the companies mentioned below have boosted capital spending at a faster rate than their competitors. At least theoretically, this makes them more competitive over the coming years.

We're not going to go into detailed analysis for each company. The goal here is to give growth-oriented investors a starting point for their own analysis.

All growth stats sourced from Fidelity, short float and performance data sourced from Finviz.

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The list has been sorted alphabetically by company name.

1. Bio-Reference Laboratories Inc. (BRLI): Medical Laboratories & Research Industry. Market cap of $600.17M.

EPS have grown by 26.52% over the last five years vs. industry average at 16.24%. EPS projected to grow by 18.75% over the next five years vs. industry average at 12.63%. Revenue has grown by 22.82% over the last five years vs. industry average at 12.42%.

Capital spending has grown by 41.97% over the last five years vs. industry average at 11.11%. The company's cash flow has grown by 27.78% over the last five years vs. industry average at 18.83%.

Short float at 23.91%, which implies a short ratio of 27.11 days. The stock has gained 5.64% over the last year.

Other Highlights:

Institutional and mutual fund investors have been net purchasers of the company's shares over the last two quarters, suggesting that the smart money thinks there's more upside to the stock. Institutional investors have been net buyers of 831.3K shares during the most recent quarter, vs. 2.0M net shares purchased in the previous quarter. Mutual fund investors have also been optimistic on the stock. They were net buyers of 286.3K shares during the most recent quarter, vs. 240.6K net shares purchased in the previous quarter.

2. Dr. Reddy's Laboratories Ltd. (RDY): Drug Manufacturer. Market cap of $5.75B.

EPS have grown by 36.08% over the last five years vs. industry average at 5.27%. EPS projected to grow by 54.95% over the next five years vs. industry average at 5.81%. Revenue has grown by 28.38% over the last five years vs. industry average at 8.35%.

Capital spending has grown by 18.03% over the last five years vs. industry average at 1.79%. The company's cash flow has grown by 27.25% over the last five years vs. industry average at 8.61%.

Short float at 4.11%, which implies a short ratio of 11.21 days. The stock has gained 39.45% over the last year.

Other Highlights:

Judging by trailing twelve month (TTM) ratios like Return on Equity (ROE), Return on Assets (ROA) and Return on Invested Capital (ROI), it's clear that the company's management is doing an excellent job. TTM ROE at 20.77%, higher than the industry average at 17.05%, TTM ROA at 11.53% vs. the industry average at 8.01%, and TTM ROI at 16.26%, higher than the industry average at 11.9%. The company also outperformed its industry competitors in terms of the TTM Return on Sales ratio (13.04% vs. the industry average at -1.96%).

3. Endo Pharmaceuticals Holdings Inc. (ENDP): Drug Manufacturer. Market cap of $3.93B.

EPS have grown by 16.02% over the last five years vs. industry average at 4.91%. EPS projected to grow by 13.06% over the next five years vs. industry average at 5.81%. Revenue has grown by 18.89% over the last five years vs. industry average at 8.39%.

Capital spending has grown by 5.18% over the last five years vs. industry average at 1.77%. The company's cash flow has grown by 17.63% over the last five years vs. industry average at 8.44%.

Short float at 5.44%, which implies a short ratio of 5.7 days. The stock has gained 55.09% over the last year.

Other Highlights:

The company has demonstrated rapid cash flow growth over the last five years, which may lower their risk going forward. Five year average cash flow growth at 17.63%, much higher than the industry average at 8.61%.

4. Express Scripts Inc. (ESRX): Health Care Plans Industry. Market cap of $28.37B.

EPS have grown by 26.96% over the last five years vs. industry average at 16.28%. EPS projected to grow by 18.13% over the next five years vs. industry average at 12.63%. Revenue has grown by 22.6% over the last five years vs. industry average at 12.39%.

Capital spending has grown by 14.85% over the last five years vs. industry average at 11.8%. The company's cash flow has grown by 24.53% over the last five years vs. industry average at 18.94%.

Short float at 1.45%, which implies a short ratio of 2.42 days. The stock has gained 22.4% over the last year.

Other Highlights:

The company has a track record of outperforming its competitors. Over the last five years, EPS grew by 26.96%, higher than the industry average at 16.24%, while revenues grew by 22.6%, outperforming the industry average at 12.42%.

5. Herbalife Ltd. (HLF): Drug Related Products Industry. Market cap of $4.56B.

EPS have grown by 64.17% over the last five years vs. industry average at -2.86%. EPS projected to grow by 12.0% over the next five years vs. industry average at 10.99%. Revenue has grown by 12.16% over the last five years vs. industry average at 5.28%.

Capital spending has grown by 20.96% over the last five years vs. industry average at 6.67%. The company's cash flow has grown by 55.13% over the last five years vs. industry average at -2.12%.

Short float at 2.96%, which implies a short ratio of 3.63 days. The stock has gained 100.63% over the last year.

Other Highlights:

Insiders appear to be optimistic on the outlook for the company. On a net basis, they've purchased an average of 9,091 shares per year (over last 2 years).

6. LHC Group, Inc. (LHCG): Home Health Care Industry. Market cap of $551.06M.

EPS have grown by 26.85% over the last five years vs. industry average at 16.24%. EPS projected to grow by 15.75% over the next five years vs. industry average at 12.63%. Revenue has grown by 34.03% over the last five years vs. industry average at 12.42%.

Capital spending has grown by 14.73% over the last five years vs. industry average at 11.11%. The company's cash flow has grown by 37.17% over the last five years vs. industry average at 18.83%.

Short float at 9.97%, which implies a short ratio of 9.2 days. The stock has lost -3.91% over the last year.

Other Highlights:

When comparing the company's price relative to earnings, it's clearly undervalued. The P/E ratio, based on the most recent quarter's earnings, stands at 10.1, lower than the industry average at 18.07, while the P/E ratio, based on trailing twelve month earnings, stands at 10.73, which is lower than the industry average at 16.95.The company also appears to be undervalued relative to projected earnings growth. PEG ratio at 0.68, vs. an industry average at 1.19.

7. Mindray Medical International Limited (MR): Medical Instruments & Supplies Industry. Market cap of $2.99B.

EPS have grown by 37.53% over the last five years vs. industry average at 16.28%. EPS projected to grow by 19.39% over the next five years vs. industry average at 12.41%. Revenue has grown by 49.71% over the last five years vs. industry average at 12.27%.

Capital spending has grown by 75.42% over the last five years vs. industry average at 8.73%. The company's cash flow has grown by 47.43% over the last five years vs. industry average at 14.61%.

Short float at 20.72%, which implies a short ratio of 21.57 days. The stock has lost -28.85% over the last year.

Other Highlights:

Institutional and mutual fund investors have been net purchasers of the company's shares over the last two quarters, suggesting that the smart money thinks there's more upside to the stock. Institutional investors have been net buyers of 6.4M shares during the most recent quarter, vs. 974.3K net shares purchased in the previous quarter. Mutual fund investors have also been optimistic on the stock. They were net buyers of 316.7K shares during the most recent quarter, vs. 4.2M net shares purchased in the previous quarter.

8. Shire plc (SHPGY): Drug Manufacturer. Market cap of $15.18B.

EPS have grown by 4.97% over the last five years vs. industry average at 4.91%. EPS projected to grow by 13.88% over the next five years vs. industry average at 5.81%. Revenue has grown by 16.76% over the last five years vs. industry average at 8.39%.

Capital spending has grown by 30.52% over the last five years vs. industry average at 1.77%. The company's cash flow has grown by 11.41% over the last five years vs. industry average at 8.44%.

Short float at 1.13%, which implies a short ratio of 4.97 days. The stock has gained 28.44% over the last year.

Other Highlights:

When compared to industry competitors, the company reported better than average profit margins during the most recent quarter. Gross margins came in at 87.00%, higher than the industry average at 62.73% (most recent quarter, annualized). Operating margin came in at 21.99%, higher than the industry average at 8.33%, while net profit margin came in at 21.99% vs. the industry average at 8.33%.

9. Teva Pharmaceutical Industries Limited (TEVA): Drug Manufacturer. Market cap of $47.5B.

EPS have grown by 18.21% over the last five years vs. industry average at 4.91%. EPS projected to grow by 14.33% over the next five years vs. industry average at 5.81%. Revenue has grown by 25.15% over the last five years vs. industry average at 8.39%.

Capital spending has grown by 18.02% over the last five years vs. industry average at 1.77%. The company's cash flow has grown by 27.1% over the last five years vs. industry average at 8.44%.

Short float at 1.15%, which implies a short ratio of 1.31 days. The stock has lost -13.81% over the last year.

Other Highlights:

The company has a track record of outperforming its competitors. Over the last five years, EPS grew by 18.21%, higher than the industry average at 5.27%, while revenues grew by 25.15%, outperforming the industry average at 8.35%.

10. Thoratec Corp. (THOR): Medical Instruments & Supplies Industry. Market cap of $1.58B.

EPS have grown by 47.58% over the last five years vs. industry average at 16.28%. EPS projected to grow by 19.8% over the next five years vs. industry average at 12.41%. Revenue has grown by 16.76% over the last five years vs. industry average at 12.27%.

Capital spending has grown by 15.26% over the last five years vs. industry average at 8.73%. The company's cash flow has grown by 17.6% over the last five years vs. industry average at 14.61%.

Short float at 10.32%, which implies a short ratio of 4.06 days. The stock has lost -5.16% over the last year.

Other Highlights:

During the last twelve months, the company generated higher earnings and revenue growth rates than its industry competitors. EPS grew by 31.25% during the most recent quarter (last quarter compared to the same quarter last year), higher than the industry average at -55.15%, while quarterly revenues decreased by -6.59%, lower than the industry average at 6.26%. Over the last twelve months, the company's EPS grew by 90.38% vs. the industry average at -67.43%, while revenues grew by 26.2%, higher than the industry average at 9.15%.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks


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