3 Stocks Poised to Dominate the Market in 2014

These companies could have a great 2014. Here's why.

Feb 7, 2014 at 6:24PM

2013 was a great year for Roche (NASDAQOTH:RHHBY). Not only did it exceed its financial targets and experience strong demand for its existing products, it is also on track to make 2014 another successful year as new products such as Perjeta and Kadcyla are set to increase sales further.

Indeed, Roche posted a 6% increase in revenue for 2013 (when compared to 2012), with pharmaceutical sales 7% higher and diagnostic sales up 4%. The former was mainly driven by HER2 breast cancer franchise drugs, while the latter saw improved Professional Diagnostics performance. Together, they contributed to a growth in core earnings per share of 10%. As ever, though, many investors are more interested in the future and, on this front, Roche seems to be making good progress, too.

It has a strong pipeline of new drugs, with 15 new molecular entities in late-stage development, as well as the potential for increased sales from new drugs such as Gazyva (U.S. approval for chronic lymphocytic leukemia) and previously mentioned Kadcyla and Perjeta, which are used to treat women with a particularly aggressive form of breast cancer.

The impact on the share price from the strong annual results was positive, with shares still trading around 5% higher at the time of this writing. However, the biggest manufacturer of cancer drugs in the world is not the only major health care company to report strong figures recently.

For instance, Allergan (NYSE:AGN) reported an increase of 20% in adjusted earnings per share when it released fourth quarter results this week, with adjusted earnings per share jumping from $1.12 in the fourth quarter of 2012 to $1.35 in the fourth quarter of 2013. This was due to top-line strength in both the specialty pharmaceuticals division as well as in the medical devices division, which posted constant currency revenue growth of 15% and 17.8%, respectively.

Perhaps more importantly for the future, the drug pipeline received positive news during the quarter, with the FDA granting approval for the marketing of Juvederm Voluma to temporarily correct age-related volume loss in the cheek area of adults. In addition, Allergan received a positive opinion for Vistabel in Europe as it aims to secure more licenses in the European Union for the treatment of lateral canthal lines (crow's feet) and glabellar (or frown) lines.

Meanwhile, Swiss-based Novartis benefited from delays in generic competition to post a revenue gain of 4% for the fourth quarter of 2013. Indeed, Novartis also expects that the launch of a generic competitor to its blockbuster blood pressure drug, Diovan, will be delayed until sometime after March 2014, meaning that full-year sales growth is forecast to be in the low-to-mid single digits for the full year.

So, while many major health care companies are struggling to post top-line growth and are seeing margins decline due to cumbersome restructuring charges, Roche, Novartis, and Allergan seem to be going from strength to strength. Furthermore, their pipelines appear to be strong and offer investors the potential for 2014 to be an improvement on what was an already successful 2013.

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Editor's Note: Avastin and Lucentis were incorrectly referred to as part of Roche's HER2 franchise. Kadcyla was misspelled in a previous version of this article.

Peter Stephens has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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