Biotech Investors' Dream Stocks
Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back and see what the 10 best stocks of the past decade were. But for my part, I'm more interested in the tools that can not only help me find new stock ideas, but also have the resources necessary to evaluate tomorrow's greatest companies.
Thankfully, there's one tool that offers a variety of resources to help with finding tomorrow's leaders: Motley Fool CAPS.
We've enlisted CAPS to screen for top biotech bi·o·tech
short for biotechnology
Noun 1. stocks and get the story behind them. CAPS' nifty screener can search the drug sector and help us find stocks with:
- A market cap of at least $100 million.
- A three year revenue growth rate of at least 20%.
- A price-to-earnings ratio Noun 1. price-to-earnings ratio - (stock market) the price of a stock divided by its earnings
securities market, stock exchange, stock market - an exchange where security trading is conducted by professional stockbrokers of less than 25.
Then we'll tap the collective intelligence of our 110,000-plus CAPS investors to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.
Opinions with the numbers
Here's a sampling from the list of stocks our screen pulled up today.
Revenue Growth Rate, Past 3 Years
CAPS Rating (out of 5)
ViroPharma (Nasdaq: VPHM)
3SBio (Nasdaq: SSRX)
Sinovac Biotech (AMEX AMEX
See: American Stock Exchange : SVA SVA School of Visual Arts
SVA Severe (Thunderstorm) Advisory
SVA Statens Veterinärmedicinska Anstalt (National Veterinary Institute, Sweden)
SVA Shareholder Value Added )
Teva Pharmaceutical (Nasdaq: TEVA)
American Oriental Bioengineering bioengineering
Application of engineering principles and equipment to biology and medicine. It includes the development and fabrication of life-support systems for underwater and space exploration, devices for medical treatment (see (NYSE NYSE
See: New York Stock Exchange : AOB AOB (on the agenda for a meeting) any other business )
Data and star rankings from CAPS. All data as of July 8.
Though ViroPharma and partner Wyeth (NYSE: WYE) recently announced that their Hepatitis C Hepatitis C Definition
Hepatitis C is a form of liver inflammation that causes primarily a long-lasting (chronic) disease. Acute (newly developed) hepatitis C is rarely observed as the early disease is generally quite mild. drug had failed clinical testing, the company is cash flow-positive, with a profitable drug already on the market. And with nearly $600 million sitting in the bank, ViroPharma has recently increased expenditures to spur sales of its drug Vancocin. With low expectations priced into the stock, many CAPS investors like the small and profitable biotech, even though it remains a risky play. Of the 1,093 investors rating the company, nearly 98% are bullish that its shares will outperform the market.
Another cash-generating biotech, 3SBio, has been selling its knockoff knock·off
An unauthorized copy or imitation, as of designer clothing: "the place to go for quality knockoffs" Women's Wear Daily.
Noun 1. version of Amgen's (Nasdaq: AMGN) anemia drug Epogen in China, called Epiao. With the success 3SBio has had from Epiao, it has been able to fund the development of several cancer drugs and even buy back shares. With some investors concerned about the risk of focusing exclusively on the Chinese market, the stock is also trading with low expectations. Risks aside, nearly 97% of the 360 CAPS investors rating 3SBio are bullish on the future.
Chinese vaccine provider Sinovac saw a monster 123% revenue increase in the first quarter, thanks to sales of its hepatitis vaccine Healive and its exclusively supplied avian flu avian flu: see influenza. vaccine to China’s national stockpile stock·pile
A supply stored for future use, usually carefully accrued and maintained.
tr.v. stock·piled, stock·pil·ing, stock·piles
To accumulate and maintain a supply of for future use. program. In May, the company donated 50,000 doses of Healive to China’s earthquake disaster area, and it's since received orders for more than 257,000 more doses from the Center for Disease Control. Though small, 216 of the 225 CAPS investors rating Sinovac have taken the plunge and voted for the stock to beat the S&P going forward.
Generic drug generic drug, a drug sold or prescribed under the nonproprietary name of its active ingredients or under a generally descriptive name rather than under a brand or trade name. giant Teva Pharmaceutical has shown that you don't have to be original to be profitable. The company delivered more than $1.8 billion in operating cash flow Operating cash flow
Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. last year, thanks to dozens of generic drugs on the market and a strong showing from its multiple sclerosis drug Copaxone. Teva is now in the sights of other generic drugsellers, though, as Mylan intends to market an equivalent to Copaxone. Teva's diverse list of generic and branded drugs has many fans, though, since 975 of the 1015 investors rating the company see it outperforming the market in the future.
American Oriental Bioengineering
High insider ownership, 30% trailing-12-month EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. growth, and a 19% return on equity are a few of the metrics that Fool Rex Moore thinks make a potential winning combination for American Oriental Bioengineering. Though shares have lost a quarter of their value in the past month, nearly 97% of the 1,589 investors rating the Chinese pharmaceutical firm still expect it to outperform the market.
Let 110,000 investors be the judge
The collective wisdom of a huge pool of investors can help give context to a page of numbers developed through a stock screen. But even with an entire community of qualified opinions acting as the judge, individual investors are still the jury and should perform their own due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. .
You can run your own favorite parameters through the CAPS screener for free. Then give your own opinion -- either good or bad -- on any company you wish in Motley Fool CAPS.
The Motley Fool Hidden Gems team recommends companies like American Oriental Bioengineering, with exceptional management and growth prospects. Check out which stocks have the service beating the market by 17 points on average with a free 30 day trial.
Fool contributorDave Mockdreams of stocks and sugarplum fairies, but not together. He owns no shares of companies mentioned here and is the author of The Qualcomm Equation. American Oriental Bioengineering is a Hidden Gems recommendation. The Fool'sdisclosure policyscreens the good, the bad, and the ugly.
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|Publication:||The Motley Fool|
|Date:||Jul 9, 2008|
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