This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

A Biotech Stock Without the Risk

ELMWOOD PARK, N.J. ( TheStreet) -- Bio-Reference Laboratories (BRLI - Get Report) sounds like a high-flying biotech stock that trades on the hopes the company will discover a cure for cancer.

Bio-Reference, in reality, is boring, making it worthy of an investment. It's certainly no Antigenics (AGEN), Dendreon (DNDN) or InterMune (ITMN).

Based in Elmwood Park, N.J., Bio-Reference operates an independent clinical laboratory that specializes in genomics, oncology, correctional health and complementary medicine. The company draws revenue from conducting tests for physicians' offices and handling clinical testing. It avoids much of the uncertainty in biotechnology by simply extracting a fee for testing services without being tied to the success or failure of those tests.

Staying Healthy In Big Cities (Forbes)

At its essence, Bio-Reference is really just a service provider, despite being lumped into the volatile health-care sector. The company's relative safety can be seen in its low beta value of only 0.86, indicating the stock doesn't offer much non-diversifiable risk, making it a solid holding for most portfolios.

Bio-Reference has gained 86% over the past year versus 25% for the S&P 500 Index. Dendreon, one of the hottest biotech stocks, has risen 99%. But it also has sky-high volatility.

Bio-Reference has tamed its borrowing during the past three years, making it even safer. The debt-to-equity ratio has fallen from 0.42 in the year ending October 2007 to just 0.2 for the year ending October 2009. This judicious use of debt financing has led to a rock-solid balance sheet that sports a current ratio of 2.2 as of January 2010.

While the lack of leverage may have hampered returns, a return on equity of 19.3% for fiscal 2009 beat the industry average of 12.6%. In sum, Bio-Reference is more stable and more profitable than others in the industry.

Value investors, however, may be turned off. A PEG ratio (a measure of price-to-growth prospects) of 1.4 and a price-to-free-cash-flow ratio of 40.5 are high, and a price-to-earnings ratio of 20 is expensive compared with the industry average of 15.

Bio-Reference is clearly a growth stock. Analysts predict earnings will grow 20% this year and 14% in 2011, and revenue will rise 17% and 19%.

Bio-Reference carries a grade of A from TheStreet's ratings model with a "buy" recommendation. The stock is in the top 20 in terms of overall score.
More on Biotech
14 Biotech Stocks Facing FDA Approval
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
BRLI $44.27 -0.23%
AAPL $118.44 -2.36%
FB $94.14 0.14%
GOOG $631.21 0.90%
TSLA $259.99 -2.31%

Markets

Chart of I:DJI
DOW 17,598.20 -91.66 -0.52%
S&P 500 2,098.04 -5.80 -0.28%
NASDAQ 5,115.3820 -12.8990 -0.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs