Research and development can be costly, but necessary undertakings for healthcare companies. To stay on the cutting edge, it is understandable that some companies need to accrue debt while they refine treatments and devices. That is why it is impressive when a healthcare company has minimal debt. Without the hindrances of debt, a company has more freedom to use assets and profits to fund growth. With this in mind, we ran a scan to find healthcare stocks that are relatively debt free. In addition, they all have received recent 'Strong Buy' ratings from industry analysts. Take a look at the list below to start your investigation.
The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.
We first looked for healthcare stocks. We then screened for businesses that have maintained a sound capital structure (D/E Ratio<.1). We then screened for businesses that analysts rate as "Strong Buy" (mean recommendation < 2). We did not screen out any market caps.
Do you think these stocks can offer attractive returns? Use our screened list as a starting point for your own analysis.
1) Lannett Company, Inc. (LCI)
| Sector | Healthcare |
| Industry | Drug Manufacturers - Other |
| Market Cap | $141.28M |
| Beta | 0.46 |
Key Metrics
| Debt/Equity Ratio | 0.07 |
| Analysts' Rating | 1.50 |
| Short Interest | 3.67% |
Lannett Company, Inc. develops, manufactures, packages, markets, and distributes generic pharmaceutical products sold under generic chemical names in the United States. The company manufactures solid oral dosage forms, including tablets, capsules, and topical and oral solutions for various indications, including glaucoma, muscle relaxation, urinary retention, migraine headache, antibiotic, anesthetic, pain management, endometriosis, irritable bowels, congestive heart failure, anticoagulant, hormone replacement, diuretic, pregnancy, obesity, dryness of the mouth, epilepsy, gout, bronchospasms, gallstone, and thyroid deficiency.
Lannett Company markets generic equivalents of Diamox, Symmetrel, Lioresal, Urecholine, Fiorinal, Cleocin, Danocrine, Bentyl, Lanoxin, Persantine, Adoxa, Periostat, Estratest, Hydrodiuril, and Dilaudid brands. The company also offers active pharmaceutical ingredients. Lannett Company sells its generic pharmaceutical products to generic pharmaceutical distributors, drug wholesalers, chain drug retailers, private label distributors, mail-order pharmacies, other pharmaceutical manufacturers, managed care organizations, hospital buying groups, governmental entities, and health maintenance organizations. Lannett Company was founded in 1942 and is based in Philadelphia, Pennsylvania.
2) China Cord Blood Corporation (CO)
| Sector | Healthcare |
| Industry | Medical Laboratories & Research |
| Market Cap | $200.40M |
| Beta | 0.32 |
Key Metrics
| Debt/Equity Ratio | 0.04 |
| Analysts' Rating | 1.00 |
| Short Interest | 0.42% |
China Cord Blood Corporation, together with its subsidiaries, engages in the provision of umbilical cord blood storage and ancillary services in the People's Republic of China. It offers cord blood testing, processing, and storage services under the direction of subscribers; laboratory testing, hematopoietic stem cell processing, and stem cell storage services; and tests, processes, and stores donated cord blood, as well as provides matching services. As of March 31, 2012, the company had three operating cord blood banks in the Beijing municipality, the Guangdong province, and the Zhejiang province. China Cord Blood Corporation is based in Central, Hong Kong.
3) OncoGenex Pharmaceuticals, Inc. (OGXI)
| Sector | Healthcare |
| Industry | Biotechnology |
| Market Cap | $206.17M |
| Beta | 2.09 |
Key Metrics
| Debt/Equity Ratio | 0.10 |
| Analysts' Rating | 1.40 |
| Short Interest | 4.45% |
OncoGenex Pharmaceuticals, Inc., a biopharmaceutical company, engages in the development and commercialization of new cancer therapies that address treatment resistance in cancer patients. The company's products include Custirsen, which is in phase III clinical trials for the treatment of metastatic castrate resistant prostate cancer; and OGX-427, a product candidate in phase II clinical trials, which is designed to inhibit heat shock protein 27. Its pre-clinical stage products include OGX-225 that is focused on reducing the production of insulin growth factor binding protein-2 (IGFBP) and IGFBP-5; and CSP-9222, a lead compound from a family of caspase activators. OncoGenex Pharmaceuticals, Inc. is headquartered in Bothell, Washington.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/22/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: This article was prepared for ZetaKap Media by one of our full-time analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.
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