Some stocks seem to have all the luck, offering the best of both worlds. They are cutting edge or at least a bit adventuresome as their products travel into uncharted territory. Innovations that they have in their pipelines are promising to push the margins even a bit further outward some time soon. Yet, despite the fact they are moving ahead at a blazing speed, they are still managing to lay down some firm financial roots, being profitable thanks at least in part to effective management.
Well, three pharmaceutical companies – Regeneron Pharmaceuticals Inc (NASDAQ:REGN), Amgen, Inc. (NASDAQ:AMGN) and Gilead Sciences, Inc. (NASDAQ:GILD) – that have developed therapies for everything from cancer and HIV to circulatory disorders seem to exemplify that perfect mix. And a review of their selling points indicates they deserve that distinction despite the fact they might be dragged down from the high perch they would otherwise enjoy by the impact of college debt.
Regeneron’s good numbers
Two simple statistics designed to measure profitability point to Regeneron Pharmaceuticals Inc (NASDAQ:REGN)’s profitability: its profit margin was measured at 52.79% and its operating margin was computed at 37.1%.
The continued expansion of its flagship product, Eylea, which treats ophthalmologic diseases such as (Wet) Age-related Macular Degeneration, has helped Regeneron Pharmaceuticals Inc (NASDAQ:REGN) compile these impressive fundamentals. Eylea’s sales for the first quarter of 2013 exceeded consensus expectations at $314 million and management estimates that revenue for the entire year will hit $1.3 billion.
And Regeneron Pharmaceuticals Inc (NASDAQ:REGN) also has in its pipeline therapies to control pain and neurotrophins, which promote the growth of nerve cells. Once available on the market, this therapy might be a welcomed addition to the emerging palliative and restorative medicine fields. And as our country ages, it might prove a boon to elders who have collected more than their share of aches and pains.
Amgen’s Promising Future
Amgen, Inc. (NASDAQ:AMGN) focuses on biologic medicines, which employs DNA technology to either insert desirable genes or remove undesirable ones. Rocket science at its best, these treatments are by many people’s opinions on track to provide “cures” for cancer and other life threatening diseases where other efforts failed.
But the fact it seems to be blazing towards the future has not inflated Amgen, Inc. (NASDAQ:AMGN)’s price into nose bleed territory. Its trailing P/E ratio, which takes into account earnings over the past 12 month period, is only 17.93; the forward P/E ratio, which is calculated on the basis of estimated future earnings is only 12.82. These statistics stack up quite favorably when compared to the average P/E ratio for health sector stocks: nearly 42. .
Gilead’s good news
Gilead Sciences, Inc. (NASDAQ:GILD)’s year to year quarterly earnings growth for the first quarter of 2013 was a hefty 63.40%. And earlier this year Gilead learned some encouraging news that might indicate this promising record will continue into the future. Its application for sofosbuvir which would be used to treat HCV (Hepatitis C Virus) infection is currently being reviewed by the European Medicines Agency (EMA).
The Center for Disease Control and Prevention estimated that 3.2 million persons in the United States have chronic Hepatitis C virus infection; so, the market for this product might be huge.
But if none of this positive information is enough to sway you towards one or all of these three pharmaceutical companies, you have an option that will spread out your risk through diversity: iShares Biotech ETF Regeneron Pharmaceuticals Inc (NASDAQ:REGN), Amgen, Inc. (NASDAQ:AMGN) and Gilead Sciences, Inc. (NASDAQ:GILD) are this fund’s three largest holdings, comprising approximately 26% of its total assets. If their performance falters, however, the fact that the fund has 115 other holdings should work to compensate for this disappointment.
A final Foolish take
So, how could college debt manage to drag down these issues when such a positive aura swirls around them? Young professionals seem to be a natural match for stocks in the healthcare or medical technology fields, areas that might not be as appealing to their older counterparts who would prefer more traveled routes. But if they are entrapped by college debts they cannot invest in these securities or in anything else for that matter. So, these offerings lose out on a potentially valuable source of support: stock purchases.
People who accumulate the most college debt are almost by definition the most highly educated: lawyers, physicians. These professionals might ordinarily be expected to make investing part of their agenda shortly after they graduate and begin earning “impressive” salaries. However, as the new normal has come into play their having to repay education debts that might run as high as $250,000 is seriously limiting their ability to take those steps.
The article Is College Debt a Drag on These Promising Healthcare Stocks originally appeared on Fool.com and is written by Harriet Tramer.
Harriet Tramer Tramer has no position in any stocks mentioned. The Motley Fool recommends Gilead Sciences. Harriet is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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