Healthcare Sector: High Quality Stocks At A Great Value
Nick Sousa, Kapitall: Analysts are favoring the healthcare sector in 2013 due to strong projected growth supported by an aging population, an increase in chronic diseases, and industry M&A activity. With this in mind, we screened for healthcare stocks that have solid returns that are also cheaply priced. [Related: Find Good Buys With Strong Returns and High Quality]
We screened for companies in the healthcare sector with a return on assets over 10% and a price-to-book value under 2. These metrics were used to find potential high quality stocks, which are stocks that have a gross profit margin divided by total assets over 33%. This ratio can be computed by taking gross profit (Revenue – COGS) from the income statement and the total asset amount from the balance sheet.
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Below is our list of great value stocks that are high in quality in the healthcare sector. List Average 1-Year Return: -18%:
1. AmSurg Corp. (AMSG): Engages in the development, acquisition, and operation of ambulatory surgery centers in partnership with physicians in the United States. Market cap at $1.06B, most recent closing price at $32.96.
P/B = 1.57 ROA = 14.23% Quality = .38
2. Columbia Laboratories Inc. (CBRX): Engages in the research, development, and commercialization of women's healthcare and endocrinology products. Market cap at $53.38M, most recent closing price at $0.61.
P/B = 1.70 ROA = 17.58% Quality = .87
3. Cyanotech Corporation (CYAN): Produces natural products derived from microalgae. Cyanotech is engaged in the cultivation and production of microalgae into natural health and nutrition products.
P/B = 1.49 ROA = 13.73% Quality = .51
4. Hi Tech Pharmacal Co. Inc. (HITK): Develops, manufactures, markets, and sells generic, prescription, over-the-counter (OTC), and nutritional products in liquid and semisolid dosage forms in the United States. Market cap at $466.54M, most recent closing price at $34.38.
P/B = 1.88 ROA = 13.24% Quality = .46