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 140,000-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.
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Company
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Revenue Growth Rate, Past 3 Years
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CAPS Rating (out of 5)
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American Oriental Bioengineering (NYSE: AOB )
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44.5%
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*****
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Spectrum Pharmaceuticals (Nasdaq: SPPI )
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182.5%
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****
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Gilead Sciences (Nasdaq: GILD )
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27.3%
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****
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Data and star rankings from CAPS as of Sept. 4.
American Oriental Bioengineering
American Oriental Bioengineering develops and markets a slew of drugs and health-care products in China, and CAPS members like its strong financials and growth potential in an emerging market. It pulled in a 21% increase in sales in its recent quarter, and a recent auditor change has some members feeling more comfortable about assuming the risk of investing in a foreign company. And recently, 61 of its products were added to the Chinese authority's all-important Essential Drug List, securing AOB’s place as a necessary drug company in the eyes of the government. Today, more than 97% of the 3,103 CAPS members rating American Oriental Bioengineering expect it to outperform the market.
Spectrum Pharmaceuticals
Spectrum Pharmaceuticals has multiple sources of potential revenue drivers in the works that have CAPS members bullish on its future. It just received FDA approval for expanded use of its cancer drug Zevalin as a first-line treatment for non-Hodgkin's lymphoma (NHL). The drug is already on the market as a secondary treatment for relapsed or refractory NHL, and the new approval is expected to boost its treatable population. Spectrum has recently gotten a nice revenue boost from its expensive colorectal cancer drug, Fusilev, but some speculate that sales will decline as a temporary shortage of generic leucovorin abates. With more than $100 million in cash and short-term investments and several other potential catalysts ahead, members like the odds, and nearly 97% of the 184 CAPS members rating Spectrum Pharmaceuticals are bullish.
Gilead Sciences
As we move into the fall season and concerns about the spread of swine flu swirl, drugstore companies such as Walgreen (NYSE: WAG ) , CVS Caremark (NYSE: CVS ) , and Rite Aid (NYSE: RAD ) are preparing for a possible increase in prescriptions and flu-related treatments. Gilead stands to benefit from the gloomy scenarios; it could see increased demand for its flu treatment, Tamiflu, which is one of only two drugs that are effective against the virus. Rite Aid said it’s recently seen a spike of Tamiflu sales in the Southeast, where an increased number of cases have been reported. In addition to flu treatments, CAPS members also like the outlook for Gilead's HIV therapies, which have seen strong sales growth in its recent quarter. Its Atripla medication is a once-a-day pill that has become a top-prescribed treatment for HIV, and it’s also working on a new combination treatment with Johnson & Johnson (NYSE: JNJ ) . At this point, nearly 97% of the 1,707 CAPS members rating Gilead Sciences see it beating the broader market.
Let 140,000 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 judges. Fools should always perform their own due diligence.
And it's easy to chime in with your own opinion: If you agree that these companies present dream opportunities -- or disagree, and see more of a nightmare -- simply add your comment to the article in the box below. No one's two cents are ever turned away!
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