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 discover the 10 best stocks of the past decade. But I'm more interested in the tools that can help me evaluate tomorrow's greatest companies.
Motley Fool CAPS offers a variety of resources to aid Fools in finding tomorrow's leaders. Our 135,000-member community is full of investors helping each other beat the market.
We'll enlist CAPS to screen for biotech companies, then get the story behind some of its more highly rated stocks. CAPS' nifty screener will help us find stocks with:
Then we'll tap the collective intelligence of our CAPS members to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.
Opinions with the numbers
Below is a sample of stocks our screen returned. You can run this screen yourself -- remember, though, that your results may differ from ours as the market changes.
|
Company
|
Revenue Growth Rate,
Past 3 Years
|
CAPS Rating
(out of 5)
|
|
Mylan (Nasdaq: MYL )
|
54.0%
|
*****
|
|
Sinovac Biotech (NYSE: SVA )
|
79.3%
|
****
|
|
Isis Pharmaceuticals (Nasdaq: ISIS )
|
52.4%
|
****
|
Data: Motley Fool CAPS.
Mylan
Despite an ongoing recession and the distraction of a sizable integration effort, Mylan has been making big bucks from recent releases of high-margin generic versions of drugs like Depakote and Paxil. In its most recent quarter, revenue increased 12.6% and earnings per share beat analyst expectations, even with currency exchange rates taking a big bite out of sales. And the company even raised the lower end of its full-year earnings-per-share guidance.
Even with potential changes in patent protection of biologic drugs becoming an increasingly important political imperative, any reduction in protection for such drugs' primary makers could work in favor of generic-drug makers like Mylan, Teva Pharmaceutical, and Novartis' Sandoz. At this point, nearly 94.6% of the 519 CAPS members rating Mylan expect it to outperform the market.
Sinovac Biotech
Despite a decline in first-quarter sales, Sinovac looks for increased sales in the second half of the year as it penetrates more markets in China, predicting that sales will be about 20% higher in 2009 than last year. The Chinese vaccine developer recently won a $12.8 million contract to be the sole provider of a hepatitis A vaccine for China's Ministry of Public Health. And like Novartis and Baxter (NYSE: BAX ) , Sinovac is working fast to make an H1N1 flu vaccine as the virus recently reached pandemic status. The company has a healthy balance sheet with $23 million in cash and equivalents, which it says can help with possible acquisitions to expand its pipeline. Many CAPS members see Sinovac as well positioned, and 95.5% of the 288 members rating the firm are bullish.
Isis Pharmaceuticals
Isis is one of the leading developers of antisense technology and has partnerships in place with major companies like Bristol-Myers Squibb (NYSE: BMY ) , Eli Lilly (NYSE: LLY ) , and GlaxoSmithKline (NYSE: GSK ) , which provide a steady cash flow stream of royalty payments. In fact, since 2007, it's brought in more than $750 million in cash from its partnerships.
Together with Genzyme it recently released positive phase 2 test results for its cholesterol drug, mipomersen, which has the potential to treat patients with severe cholesterol problems. The partnership with Genzyme helped boost revenue in its most recent quarter, and the sale of its Ibis Biosciences subsidiary to Abbott Laboratories for $175 million helped bring its cash position to $652 million in cash and short-term investments. Although shares can be volatile, many CAPS members see a high reward potential with Isis. Overall, nearly 95% of the 488 CAPS members rating Isis Pharmaceuticals expect it to beat the broader market.
Let 135,000 members be the jury
The collective wisdom of a huge pool of investors can help give context to a page of numbers from a stock screen -- but individual investors are still the best judge. Fools should always perform their own due diligence.
Run your favorite factors through the Motley Fool CAPS screener. It's totally free, and we think you'll like the results.
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