Jazz Pharma Still Making Investors Sing

NEW YORK (TheStreet) -- At the end of 2013, Jazz Pharamecuticals (JAZZ) announced the acquisition of Gentium. Both are among my stock picsk. Jazz has blasted off to new highs since news of the merger.

I have liked Jazz for a long time now. It has done very well so far. But what now?

Data from Best Stocks Now App

Jazz Pharmaceuticals is a nearly $9 billion mid-cap specialty biopharmaceutical company that focuses on the identification, development and commercialization of products for narcolepsy, oncology, pain and psychiatry.

Performance

Over the past five years, the stock has made beautiful music. It is one of the best performers of any stock that I track.

Data from Best Stocks Now App


Jazz has averaged an astounding 175% per year over the last five years, while the S&P 500 averaged only 16.6% during that same time frame. Over the last three years, Jazz has delivered 89%. The S&P delivered 11.5% returns to investors. Over the last 12 months, Jazz is up 164%, while the S&P is up only 19%.

However, Jazz is a very aggressive stock. Note that it was down a nauseating 87% in 2008. Hence my safety grade of D for it.

Jazz passes my overall performance test however, and earns a current momentum grade A+.

Valuation

Here is where valuation comes into play.

Data from Best Stocks Now App

I see a stock that is trading at 19 times forward earnings. Jazz is expected to continue to grow those earnings by about 19% per year over the next five years. That makes for a very reasonable price-to-earnings growth ratio of just 0.98.

When I do the math, I come up with a five-year target price of $300 on the stock. Jazz is currently only trading at $152. In other words, I see a stock that has 98% upside potential.

Will Jazz ever get there? I don't know. But if Jazz can continue to execute, I'll stay along for the ride.

Stock Chart

Lastly, I see a chart that's still hitting new highs. As far as I'm concerned, all systems are still go on Jazz.

Out of 3,813 stocks in my Best Stocks Now app database, Jazz comes in fifth. It's a stock that I own at Gunderson Capital Management in my aggressive portfolios accounts.

Data from Best Stocks Now App

At the time of publication, the author held JAZZ in his managed portfolios.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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