Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, drugmaker Forest Labs
With that in mind, let's take a closer look at Forest's business and see what CAPS investors are saying about the stock right now.
Forest facts
| Headquarters (founded) | New York City (1956) |
| Market Cap | $8.94 billion |
| Industry | Pharmaceuticals |
| Trailing-12-Month Revenue | $4.22 billion |
| Management | CEO Howard Solomon (since 1977) CFO Francis Perier Jr. (since 2004) |
| Return on Equity (average, past 3 years) | 19.5% |
| Cash/Debt | $3.3 billion / $0 |
| Competitors |
Pfizer Eli Lilly GlaxoSmithKline Teva Pharmaceutical |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 95% of the 585 members who have rated Forest believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars Clint35 and TSIF, both of whom are ranked in the top 10% of our community.
This past summer, Clint35 helped Fools see the greener side of Forest:
Their margins are pretty good. Sales have been improving the last couple years, not by a lot but up is up. They have a little over 3B in cash and equivilants and no debt. Very good deal.
While Forest faces a pretty steep patent cliff within the next few years, our community remains confident in the company's long-term prospects. With 20%-plus cash king margins and a cash hoard that represents a much bigger chunk of its assets (53%) than big drug rivals Pfizer (10%), Lilly (19%), Glaxo (16%), and Teva (14%), Forest seems well-armed to address its portfolio concerns. Additionally, with the shares trading at a forward P/E of just 7.5 -- a discount to more direct threats like Shire
CAPS All-Star TSIF expands on the bull case:
Keeping your drug pipeline secure, growing, not encroached on by generics, etc is a tough job, but overall Forest does it fairly well. ... Forest is sitting on about $3 Billion in cash, no debt, and great cash flow, so is ripe to acquire to grow market share. Last quarter was a tough one, but overall Forest maintains good margins, (12% profit, 18% operating) with a decent P/B of only 2 and a P/S of 2.1. ...
What to watch for:
1. How Forest Spends it's cash coffer.
2. Anymore run-ins with the FDA.
3. It's drug portfolio, (exclusive patents), which is currently crimping Forest Laboratories share price.
What do you think about Forest, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
