Taro Pharmaceutical Industries (
TARO
,
quote
) is a drug company with a high profit margin and high sales
growth for those looking to gain from the expansion of the global
consumer class.
Based in Haifa Bay, Taro is a:
"science-based pharmaceutical company, together with its
subsidiaries, [that] engages in the research, development,
production, and marketing of pharmaceutical products primarily in
the United States, Canada, and Israel. It offers prescription and
over-the-counter (OTC) pharmaceutical products focusing on
primary areas comprising topical creams and ointments, liquids,
capsules, and tablets principally in the dermatological and
topical, cardiovascular, neuropsychiatric, and anti-inflammatory
therapeutic categories."
Emerging market growth has been the
greatest area of earnings for the pharmaceutical
industry
, and for health care overall. This is certainly
demonstrated in both the balance sheet and income statement of
Taro Pharmaceutical. The profit margin is 37.40%. That compares
very favorably with the 15.08% profit margin of Teva
Pharmaceutical Industries (
TEVA
,
quote
), another blue chip Israeli drug company well placed to grow
with the emerging market middle class. 20% or above is a high
profit margin range.
The return-on-equity is also robust for Taro. The average
return-on-equity for a member of the Standard & Poor's 500
Index is around 15%. For Taro, it is 39.48%.
Sales growth and earnings-per-share growth are soaring,
contributing to Taro's high profit status. On a quarterly basis,
sales growth is up by 34.73%. Over the same period,
earnings-per-share growth is higher by 82.36%.
Future
growth looks very positive
for Taro Pharmaceutical. The price-to-earnings growth ratio is
0.57. A price-to-earnings growth ratio of 1 is considered to be
adequate: the lower the better. For Teva, the price-to-earnings
growth ratio is 1.47. Facilitating this future growth is a
balance sheet with plenty of cash and almost no debt.
The growth of the global middle class will be the most
important investing trend of the decades ahead according to
financial columnist Jim Jubak. As billions around the world
become more affluent, more drugs are consumed. In addition, aging
populations in the United States, Europe, and Japan, require more
pharmaceutical products for their health care needs and
concerns.
Year to dare, Taro Pharmaceutical is up 39.40%. As there is
only a miniscule short float of 0.03%, few are taking a position
that the share price will fall. The trend is the friend of the
shareholders of Taro, trading well above its 20-day, 50-day and
200-day moving averages.
