12/03/2012

My Best Healthcare Stock Picks For 2013 | Last Year’s Picks Gained 31.55%

Last year at this time, I made a screen of some stocks from the healthcare sector with an interesting market valuation, a great past growth performance as well as good earnings situation. The stocks had a forward P/E of less than 15, a sales growth over the recent five years of more than 10 percent as well as an operating margin over 10 percent. Exactly seven stocks fulfilled these criteria at that time. Today I like to review these picks and try to discover a new list of potential stocks for next year, 2013. 

Over the recent year the Dow Jones Index is up 8.36 percent, the S&P 500 gained 13.82 percent and the NASDAQ is 14.58 percent higher. My seven healthcare picks from last year performed in average 31.55 percent while the healthcare sector summarized a total gain of 25.7 percent. Below is a current screen of the seven picks with performance figures.


Performance Review Of The Healthcare Picks 2012 (Click to enlarge)

The bad news for me is that I don't have invested in one of them. Now I try to make a similar screen with attractive price ratios. The only new restrictions are simple. I allow lower capitalized stocks (over USD 2 billion market capitalization) and introduce a new barrier in terms of earnings growth. I want mid-term (next five years) earnings per share growth of more than 5 percent. Thirteen companies remain.

Here are my favorite stocks:
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Abbott Laboratories (NYSE:ABT) has a market capitalization of $102.74 billion. The company employs 91,000 people, generates revenue of $38.851 billion and has a net income of $4.728 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $8.795 billion. The EBITDA margin is 22.64 percent (the operating margin is 14.81 percent and the net profit margin 12.17 percent).

Financial Analysis: The total debt represents 25.57 percent of the company’s assets and the total debt in relation to the equity amounts to 63.07 percent. Due to the financial situation, a return on equity of 20.07 percent was realized. Twelve trailing months earnings per share reached a value of $4.11. Last fiscal year, the company paid $1.92 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 15.81, the P/S ratio is 2.64 and the P/B ratio is finally 4.18. The dividend yield amounts to 3.14 percent and the beta ratio has a value of 0.32.


”Long-Term
Long-Term Stock History Chart Of Abbott Laboratories (ABT)
”Long-Term
Long-Term Dividends History of Abbott Laboratories (ABT)
”Long-Term
Long-Term Dividend Yield History of Abbott Laboratories (ABT)

Herbalife (NYSE:HLF) has a market capitalization of $4.96 billion. The company employs 5,100 people, generates revenue of $3.454 billion and has a net income of $412.58 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $634.12 million. The EBITDA margin is 18.36 percent (the operating margin is 16.28 percent and the net profit margin 11.94 percent).

Financial Analysis: The total debt represents 14.08 percent of the company’s assets and the total debt in relation to the equity amounts to 36.35 percent. Due to the financial situation, a return on equity of 78.78 percent was realized. Twelve trailing months earnings per share reached a value of $3.88. Last fiscal year, the company paid $0.73 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 11.84, the P/S ratio is 1.44 and the P/B ratio is finally 9.50. The dividend yield amounts to 2.61 percent and the beta ratio has a value of 1.70.


”Long-Term
Long-Term Stock History Chart Of Herbalife (HLF)
”Long-Term
Long-Term Dividends History of Herbalife (HLF)
”Long-Term
Long-Term Dividend Yield History of Herbalife (HLF)

Teva Pharmaceuticals (NYSE:TEVA) has a market capitalization of $35.02 billion. The company employs 45,754 people, generates revenue of $18.312 billion and has a net income of $2.829 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $4.174 billion. The EBITDA margin is 22.79 percent (the operating margin is 16.98 percent and the net profit margin 15.45 percent).

Financial Analysis: The total debt represents 28.95 percent of the company’s assets and the total debt in relation to the equity amounts to 65.40 percent. Due to the financial situation, a return on equity of 12.50 percent was realized. Twelve trailing months earnings per share reached a value of $2.44. Last fiscal year, the company paid $0.95 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 16.52, the P/S ratio is 2.08 and the P/B ratio is finally 1.71. The dividend yield amounts to 2.55 percent and the beta ratio has a value of 0.36.


”Long-Term
Long-Term Stock History Chart Of Teva Pharmaceuticals (TEVA)
”Long-Term
Long-Term Dividends History of Teva Pharmaceuticals (TEVA)
”Long-Term
Long-Term Dividend Yield History of Teva Pharmaceuticals (TEVA)


Take a closer look at the full list of next year's best healthcare stock picks. The average P/E ratio amounts to 19.60 and forward P/E ratio is 16.84. The dividend yield has a value of 2.75 percent. Price to book ratio is 3.46 and price to sales ratio 2.06. The operating margin amounts to 15.16 percent. The average stock has a debt to equity ratio of 0.92.

Here is the full table with some fundamentals (TTM):

Best Healthcare Picks For 2013 (Click to enlarge)

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Related stock ticker symbols:
ABT, STJ, HLF, TEVA, SYK, TMO, UHS, LIFE, MD, CELG, JAZZ, UTHR, SLXP

Selected Articles:

* I am long HLF. I receive no compensation to write about these specific stocks, sector or theme. I don't plan to increase or decrease positions or obligations within the next 72 hours.

For the other stocks: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.

1 comment:

  1. Anonymous12/04/2012

    Many institutional owners love solid healthcare stocks. I believe that is partly due to many investors' inherent belief in the strength of good healthcare stocks.

    With the proliferation of companies in the healthcare sector, it can be a daunting endeavor to stay on top of the latest developments in research, treatments and devices. To remain competitive, many healthcare companies have to be both nimble and creative which can incur large and sometimes unanticipated costs.

    ReplyDelete

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