Shire, Covidien Lead High-Flying Stocks - TheStreet

BOSTON (TheStreet) -- Despite Wednesday's precipitous drop for U.S. stock-market indices, some health-care shares rallied, helped by Republican Scott Brown's electoral victory in Massachusetts. Here are three stocks that achieved 52-week highs.

3. Cigna Corp.

(CI) - Get Report

climbed 0.7% to $38.20. Shares of the managed-health-care company have rallied 172% over the past year.

The numbers

: Third-quarter profit surged 92% to $329 million, or $1.19 a share, as revenue fell 7% to $4.5 billion. Cigna's gross margin widened from 7% to 13%, and its operating margin stretched from 6% to 12%. The company possesses adequate liquidity, with $1.7 billion of cash. Its 0.5 debt-to-equity ratio indicates a balanced capital structure. Our quantitative model gives Cigna a financial-strength score of 6.9 out of 10.

The stock

: We rate Cigna "hold." The stock outpaced major U.S. indices in the past year. The shares are undervalued in comparison to health-care-service peers based on all of our valuation measures, excluding cash flow per share. Democrats still hold Congressional majorities and are unlikely to set aside their health-care aspirations.

2. Shire

(SHPGY)

increased 2.4% to $61.64. Shares of the pharmaceutical company have risen 48% during the past 52 weeks.

The numbers

: Shire swung to a third-quarter profit of $60 million, or 33 cents a share, from a loss of $35 million, or 19 cents, a year earlier. Revenue dropped 14% to $667 million. Shire's gross margin narrowed from 95% to 86%, and its operating margin slimmed from 32% to 15%. A quick ratio of 0.9 and debt-to-equity ratio of 0.7 reflect a stable financial position.

The stock

: We rate Shire "hold." The stock advanced more than the

Dow Jones Industrial Average

and

S&P 500 Index

did over the past year. The shares are expensive relative to pharmaceutical peers based on trailing earnings, projected earnings, book value and cash flow per share. They are undervalued when considering sales per share.

1. Covidien

(COV)

jumped 4.4% to $51.62. Shares of the medical-equipment and pharmaceutical company have rallied 48% over the past year.

The numbers

: Fiscal fourth-quarter profit plummeted 86% to $56 million, or 11 cents a share, as revenue fell 5% to $2.7 billion. Covidien's gross margin dropped from 59% to 53%, and its operating margin tightened from 21% to 17%. A quick ratio of 1.5 and a debt-to-equity ratio of 0.4 demonstrate fiscal prudence. Our model gives Covidien a financial-strength score of 6.9 out of 10.

The stock

: We rate Covidien "hold." The stock outperformed the Dow and S&P 500 over 52 weeks. The shares are inexpensive relative to health-care-equipment peers based on all of our valuation measures, including trailing earnings, projected earnings, book value, sales and cash flow per share.

-- Reported by Jake Lynch in Boston.