4. Medco Health Solutions (MHS) is a pharmacy benefit manager.
The numbers: Third-quarter net income increased 13% to $336 million and earnings per share climbed 19% to 69 cents, boosted by a lower share count. Revenue grew 18% to $15 billion. Medco's gross margin remained steady at 7%, and its operating margin was unchanged at 4%. A quick ratio of 1 reflects adequate liquidity. A debt-to-equity ratio of 0.7 indicates conservative leverage.
The stock: Medco has advanced 47% this year, more than major U.S. indices. The stock trades at a price-to-earnings ratio of 25, a premium to the market and health care service peers. Medco doesn't pay dividends.
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