Dream Stocks for Biotech Investors

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 165,000-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:

• A market cap of at least $100 million.
• A three-year revenue growth rate of at least 15%.
• A price-to-earnings ratio of less than 25.

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.

Data and star rankings from CAPS.

SciClone Pharmaceuticals
CAPS members have elevated SciClone Pharmaceuticals' CAPS rating from two to five stars over the past year, as more investors see a potential winner in the stock. Its hepatitis drug Zadaxin has continued to sell well in China. Overall, first-quarter revenue from the drug grew by 19%, and the company sees more opportunity to expand sales of the drug by penetrating more markets in tier 1 and 2 cities in China.

It's also shown clinical trial data that Zadaxin enhances immune response when given with Novartis' (NYSE: NVS) Focetria H1N1 flu vaccine. Although Novartis expects shipments of its swine flu vaccines to ebb through the year, SciClone believes Zadaxin will help enhance other vaccines as well, giving about 95% of the 118 CAPS members who have rated SciClone confidence that the company will outperform the broader market.                      

Teva Pharmaceutical
CAPS members have kept Teva at the highest CAPS rating for much of the past year. Many investors believe the company's in a great position, since many major drugmakers face upcoming patent cliffs. Teva's first-quarter profit jumped 58% with help from its own branded Copaxone sales, as well as sales from generics including versions of Mirapex and sanofi-aventis' (NYSE: SNY) Eloxatin.

It also recently launched a generic version of Pfizer's (NYSE: PFE) Effexor, which itself has annual U.S. sales of about $2.75 billion. With Teva's leading position in the market for generics and pressure on branded-drug costs, a lot of investors are buying into the growth potential. Close to 97% of the 1,792 CAPS members rating Teva Pharmaceutical see it beating the broader market.    

Myriad Genetics
Myriad Genetics shares have faced headwinds lately, buffeted by third-quarter results and a full-year forecast that missed expectations, as well as legal issues surrounding patent protection of its novel methods. But some investors expect its preventive and personalized medicine diagnostic products to overcome those obstacles and benefit from a growing market, as more doctors use genetic testing to guide them in preventing disease and optimizing treatments.

Health-benefits companies like Medco Health Solutions (NYSE: MHS) -- which is launching an expanded genetic test program -- also see personalized medicine as a way to cut costs. PricewaterhouseCoopers echoes that optimism, with an expectation that the annual market for diagnostic tests will reach $42 billion by 2015.

The opportunity is enough for about 89% of the 644 CAPS members rating Myriad Genetics to make a bullish call.

Let 165,000 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 of what to do with their own money. Fools should always perform their own due diligence.

Happily, it's easy to chime in with your own opinion. If you agree that these companies present dream opportunities -- or see more of a nightmare instead -- simply scroll down and add your thoughts in the comments box below.