Five Growth Stocks With a Margin of Safety

Lincoln Educational Services, Medco Health Solutions, Bio-Reference Laboratories, DeVry and Teva Pharmaceuticals are rated 'buy.'
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BOSTON (TheStreet) -- The safest investments are companies that can grow in any economy -- boom or bust. The following five are expected to increase revenue and profit by at least 12% in the coming year.

5. Lincoln Educational Services

(LINC) - Get Report

provides career education.

The numbers

: Third-quarter profit more than doubled to $14 million, or 50 cents a share, as revenue grew 48% to $148 million. Lincoln's operating margin stretched from 10% to 16%. The company has an admirable financial position, with $38 million of cash and $37 million of debt.

The stock

: Lincoln increased 18% during the past year, less than major U.S. indices. The stock trades at a price-to-earnings ratio of 13, a discount to diversified consumer services peers. Lincoln doesn't pay dividends.

4. Medco Health Solutions

(MHS)

is a pharmacy-benefits 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 operating margin remained steady at 4%. A quick ratio of 1 and debt-to-equity ratio of 0.7 indicate a sound financial position.

The stock

: Medco advanced 27% during the past year, beating the

Dow Jones Industrial Average

and

S&P 500 Index

. The stock trades at a price-to-earnings ratio of 24, a premium to health-care-services peers. Medco doesn't pay dividends.

3. Bio-Reference Laboratories

(BRLI)

provides clinical-testing services in the New York metropolitan area.

The numbers

: Fiscal fourth-quarter profit increased 37% to $7.2 million, or 51 cents a share, as revenue advanced 26% to $102 million. Bio-Reference's operating margin ascended from 12% to 13%. The company is financially sound, evident in its quick ratio of 1.9 and debt-to-equity ratio of 0.2.

The stock

: Bio-Reference increased 46% during the past year, outpacing major U.S. indices. The stock trades at a price-to-earnings ratio of 24, a premium to health-care-services peers. Bio-Reference doesn't pay dividends.

2. DeVry

(DV)

is a for-profit educator.

The numbers

: Fiscal second-quarter profit increased 69% to $72 million, or $1 a share, as revenue grew 28% to $473 million. DeVry's operating margin widened from 17% to 23%. The company has a liquid balance sheet, with $389 million of cash and $45 million of debt.

The stock

: DeVry advanced 7% during the past year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 21, on par with diversified consumer-services peers. The shares offer a 0.3% dividend yield.

1. Teva Pharmaceuticals

(TEVA) - Get Report

is an Israeli drugmaker.

The numbers

: Third-quarter net income inched up 3% to $649 million, but earnings per share fell 6% to 72 cents. Revenue increased 25% to $3.6 billion. Teva's operating margin ascended from 23% to 24%. A quick ratio of 0.9 indicates less-than-ideal liquidity. A debt-to-equity ratio of 0.3 reflects modest leverage.

The stock

: Teva rose 35% during the past year, beating the Dow and S&P 500. The stock trades at a price-to-earnings ratio of 61, a premium to pharmaceutical peers. The shares offer a 1.1% dividend yield.

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