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Jim Cramer and Stephanie Link Add Celgene (CELG), Express Scripts (ESRX) to Action Alerts PLUS Portfolio

Stocks in this article: CELG ESRX

NEW YORK (TheStreet) -- TheStreet's Jim Cramer and Stephanie Link have added Celgene  (CELG) and Express Scripts  (ESRX) to the Action Alerts PLUS Portfolio as they have been looking to increase their weighting in healthcare. 

Cramer notes that many people had asked him when he would finally buy Celgene. When he did, a U.K. ruling that is not integral to their numbers hammered the stock and drove down the price. Express Scripts, he says, is part of a healthcare cost containment that he and Link have liked for quite some time.

Cramer also points out that one buys Celgene not for tomorrow, but for 2016 when he says it could earn $16 a share. He also adds that Express Scripts has momentum that is not reflected in the stock.

Link says Express Scripts' Medco acquisition offers some synergies even though the deal has been slow out of the gate. She believes Obamacare will provide some lift to Express Scripts in 2014 and 2015.

Must Watch: Jim Cramer and Stephanie Link Add Celgene and Express Scripts to AAP

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

---------- Separately, TheStreet Ratings team rates CELGENE CORP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CELGENE CORP (CELG) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, reasonable valuation levels, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CELG's revenue growth has slightly outpaced the industry average of 14.9%. Since the same quarter one year prior, revenues rose by 21.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Biotechnology industry and the overall market, CELGENE CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for CELGENE CORP is currently very high, coming in at 96.51%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.21% trails the industry average.
  • Net operating cash flow has increased to $550.70 million or 12.29% when compared to the same quarter last year. Despite an increase in cash flow of 12.29%, CELGENE CORP is still growing at a significantly lower rate than the industry average of 62.62%.
  • You can view the full analysis from the report here: CELG Ratings Report

----------

Separately, TheStreet Ratings team rates EXPRESS SCRIPTS HOLDING CO as a "buy" with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate EXPRESS SCRIPTS HOLDING CO (ESRX) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, growth in earnings per share, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has slightly increased to $2,925.20 million or 8.72% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -26.40%.
  • EXPRESS SCRIPTS HOLDING CO's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, EXPRESS SCRIPTS HOLDING CO increased its bottom line by earning $2.31 versus $1.85 in the prior year. This year, the market expects an improvement in earnings ($4.95 versus $2.31).
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 31.00% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.46 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • You can view the full analysis from the report here: ESRX Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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