The health care sector is up a whopping 157% this year since Jan. 2 compared to a mere 2.9% from the overall S&P 500 in the same time period.
Looking to add even more performance to your portfolio? Consider pharmaceutical stocks with so-called high beta -- a common measurement of volatility. Volatility can be great for your portfolio -- if the volatile stocks move in a positive direction, that is.
So if you're a risk taker, consider these five pharmaceuticals stocks. The stocks on this list are all rated buy, with a B or better rating. The stocks are also among the most volatile stocks in their sector, each with beta measurements of greater than 1. And when you're done be sure to check out Jefferies' 21 stock picks for the next six months and beyond.
TheStreet Ratings, TheStreet's proprietary ratings tool, projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.
Note: Research and ratings are as of June 7, 2015. Year-to-date returns are based on June 15, 2015 closing prices.ENDP data by YCharts
1. Endo International (ENDP)
Market Cap: $16.7 billion
Rating: Buy, B
Year-to-date return: 12.9%
Endo International plc, a specialty healthcare company, focuses on branded and generic pharmaceuticals and devices worldwide. It operates through four segments: U.S. Branded Pharmaceuticals, U.S. Generic Pharmaceuticals, Devices, and International Pharmaceuticals.
TheStreet said: "We rate ENDO INTERNATIONAL PLC (ENDP) a BUY. This is driven by a few notable 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, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- ENDP's very impressive revenue growth greatly exceeded the industry average of 2.1%. Since the same quarter one year prior, revenues leaped by 51.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- ENDO INTERNATIONAL PLC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ENDO INTERNATIONAL PLC continued to lose money by earning -$2.23 versus -$4.67 in the prior year. This year, the market expects an improvement in earnings ($4.53 versus -$2.23).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Pharmaceuticals industry average. The net income increased by 82.7% when compared to the same quarter one year prior, rising from -$436.91 million to -$75.72 million.
- Net operating cash flow has significantly increased by 66.02% to -$89.81 million when compared to the same quarter last year. In addition, ENDO INTERNATIONAL PLC has also vastly surpassed the industry average cash flow growth rate of -23.98%.
- You can view the full analysis from the report here: ENDP Ratings Report