NEW YORK (TheStreet) -- Are pharmaceuticals a good investment right now, during the wake of anticipated rising interest rates? JPMorgan Chase & Co. (JPM - Get Report)  thinks so.

The bank's Chris Schott sees the recent selloff in the pharmaceutical industry as a buying opportunity.

The analyst especially favors the large-cap pharmaceuticals such as Allergan plc (AGN - Get Report) , Valeant Pharmaceuticals International, Inc. (VRX) and Teva Pharmaceutical Industries Limited (TEVA - Get Report) ; along with Bristol-Myers Squibb Company (BMY - Get Report) and Pfizer Inc. (PFE - Get Report) , because of launches of new products and an expected update of the pipeline in the next six-to-12 months.

The note sees opportunities in the mid-cap pharmaceutical sector, with companies such as Endo International plc (ENDP - Get Report) and Akorn, Inc. (AKRX - Get Report) .

JPMorgan expects launches of new products and more merger activity in the mid-cap sector in spite of the expected rise in interest rates by the Federal Reserve.

Here's the list, paired with ratings from TheStreet Ratings for added perspective.

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.

Check out which stocks made the list. And when you're done, be sure to read about which safe, A+ rated stocks you should buy now. Year-to-date returns are based on September 15, 2015 prices as of 10:07am.

ENDP Chart ENDP data by YCharts
7. Endo International plc (ENDP - Get Report)

Rating: Hold, C
Market Cap: $15.6 billion
Year-to-date return: 3.6%

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. The U.S.

TheStreet Ratings team rates ENDO INTERNATIONAL PLC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate ENDO INTERNATIONAL PLC (ENDP) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow."

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

  • The revenue growth greatly exceeded the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 24.0%. 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 debt-to-equity ratio is somewhat low, currently at 0.88, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.27, which illustrates the ability to avoid short-term cash problems.
  • 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, despite the company's weak earnings results. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Pharmaceuticals industry. The net income has significantly decreased by 1283.5% when compared to the same quarter one year ago, falling from $21.16 million to -$250.42 million.
  • Net operating cash flow has significantly decreased to $12.32 million or 93.65% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: ENDP

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BMY Chart BMY data by YCharts
6. Bristol-Myers Squibb Company (BMY - Get Report)

Rating: Hold, C
Market Cap: $98.8 billion
Year-to-date return: 0.32%

Bristol-Myers Squibb Company discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products worldwide.

TheStreet Ratings team rates BRISTOL-MYERS SQUIBB CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate BRISTOL-MYERS SQUIBB CO (BMY) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."

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

  • The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 7.0%. 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 current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.08, which illustrates the ability to avoid short-term cash problems.
  • The gross profit margin for BRISTOL-MYERS SQUIBB CO is currently very high, coming in at 80.33%. Regardless of BMY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BMY's net profit margin of -3.12% significantly underperformed when compared to the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Pharmaceuticals industry and the overall market, BRISTOL-MYERS SQUIBB CO's return on equity is below that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to $71.00 million or 93.27% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: BMY

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VRX Chart VRX data by YCharts
5. Valeant Pharmaceuticals International, Inc. (VRX)

Rating: Hold, C+
Market Cap: $77.3 billion
Year-to-date return: 57.6%

Valeant Pharmaceuticals International, Inc. develops, manufactures, and markets pharmaceuticals, over-the-counter products, and medical devices worldwide.

TheStreet Ratings team rates VALEANT PHARMACEUTICALS INTL as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate VALEANT PHARMACEUTICALS INTL (VRX) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and generally higher debt management risk."

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

  • The revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues rose by 33.9%. 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.
  • Net operating cash flow has slightly increased to $410.50 million or 9.17% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.18%.
  • VALEANT PHARMACEUTICALS INTL has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VALEANT PHARMACEUTICALS INTL turned its bottom line around by earning $2.67 versus -$2.62 in the prior year. This year, the market expects an improvement in earnings ($11.63 versus $2.67).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Pharmaceuticals industry. The net income has significantly decreased by 142.1% when compared to the same quarter one year ago, falling from $125.80 million to -$53.00 million.
  • The debt-to-equity ratio is very high at 4.80 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, VRX maintains a poor quick ratio of 0.78, which illustrates the inability to avoid short-term cash problems.
  • You can view the full analysis from the report here: VRX

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AKRX Chart AKRX data by YCharts
4. Akorn, Inc. (AKRX - Get Report)

Rating: Buy, B
Market Cap: $4.3 billion
Year-to-date return: 5%

Akorn, Inc. develops, manufactures, and markets generic and branded prescription pharmaceuticals, as well as animal and over-the-counter (OTC) consumer health products in the United States and internationally. It operates through two segments, Prescription Pharmaceuticals and Consumer Health.

TheStreet Ratings team rates AKORN INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate AKORN INC (AKRX) a BUY. This is driven by several positive factors, 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, expanding profit margins, good cash flow from operations, increase in net income and growth in earnings per share. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • AKRX's very impressive revenue growth greatly exceeded the industry average of 6.8%. Since the same quarter one year prior, revenues leaped by 168.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for AKORN INC is rather high; currently it is at 62.95%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.02% is above that of the industry average.
  • Net operating cash flow has increased to $16.65 million or 11.61% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -10.24%.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Pharmaceuticals industry. The net income increased by 105.3% when compared to the same quarter one year prior, rising from $16.68 million to $34.23 million.
  • AKORN INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AKORN INC reported lower earnings of $0.29 versus $0.46 in the prior year. This year, the market expects an improvement in earnings ($1.96 versus $0.29).
  • You can view the full analysis from the report here: AKRX

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AGN Chart AGN data by YCharts
3. Allergan plc (AGN - Get Report)

Rating: Buy, B
Market Cap: $117.5 billion
Year-to-date return: 16.1%

Allergan plc develops, manufactures, and distributes generic, branded, biosimilar, and over-the-counter (OTC) pharmaceutical products. It operates in three segments: North American Brands, North American Generics and International, and Anda Distribution.

TheStreet Ratings team rates ALLERGAN PLC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate ALLERGAN PLC (AGN) a BUY. This is driven by several positive factors, 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, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel its 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:

  • AGN's very impressive revenue growth greatly exceeded the industry average of 6.8%. Since the same quarter one year prior, revenues leaped by 115.8%. 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.
  • Compared to its closing price of one year ago, AGN's share price has jumped by 26.96%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • Net operating cash flow has significantly increased by 157.87% to $1,401.30 million when compared to the same quarter last year. In addition, ALLERGAN PLC has also vastly surpassed the industry average cash flow growth rate of -10.24%.
  • The gross profit margin for ALLERGAN PLC is currently very high, coming in at 73.58%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -4.22% is in-line with the industry average.
  • The current debt-to-equity ratio, 0.59, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.78 is somewhat weak and could be cause for future problems.
  • You can view the full analysis from the report here: AGN

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PFE Chart PFE data by YCharts
2. Pfizer Inc. (PFE - Get Report)

Rating: Buy, B
Market Cap: $202.7 billion
Year-to-date return: 5.3%

Pfizer Inc., a biopharmaceutical company, discovers, develops, manufactures, and sells healthcare products worldwide.

TheStreet Ratings team rates PFIZER INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate PFIZER INC (PFE) a BUY. This is driven by a number of 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 largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, solid stock price performance, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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

  • The current debt-to-equity ratio, 0.53, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, PFE has a quick ratio of 1.62, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Net operating cash flow has remained constant at $4,090.00 million with no significant change when compared to the same quarter last year. Along with maintaining stable cash flow from operations, the firm exceeded the industry average cash flow growth rate of -10.24%.
  • 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, despite the company's weak earnings results. 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.
  • The gross profit margin for PFIZER INC is currently very high, coming in at 84.72%. Regardless of PFE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PFE's net profit margin of 22.16% compares favorably to the industry average.
  • You can view the full analysis from the report here: PFE

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TEVA Chart TEVA data by YCharts
1. Teva Pharmaceutical Industries Limited (TEVA - Get Report)

Rating: Buy, A
Market Cap: $54.2 billion
Year-to-date return: 11%

Teva Pharmaceutical Industries Limited develops, manufactures, markets, and distributes generic, specialty, and other pharmaceutical products worldwide. The company operates in two segments, Generic Medicines and Specialty Medicines.

TheStreet Ratings team rates TEVA PHARMACEUTICALS as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate TEVA PHARMACEUTICALS (TEVA) 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 reasonable valuation levels, good cash flow from operations, expanding profit margins, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. We feel its 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:

  • Net operating cash flow has increased to $1,480.00 million or 40.55% when compared to the same quarter last year. In addition, TEVA PHARMACEUTICALS has also vastly surpassed the industry average cash flow growth rate of -10.24%.
  • The gross profit margin for TEVA PHARMACEUTICALS is rather high; currently it is at 64.78%. 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 10.85% trails the industry average.
  • 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, despite the company's weak earnings results. 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.
  • TEVA PHARMACEUTICALS's earnings per share declined by 27.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, TEVA PHARMACEUTICALS increased its bottom line by earning $3.56 versus $1.50 in the prior year. This year, the market expects an improvement in earnings ($5.33 versus $3.56).
  • You can view the full analysis from the report here: TEVA

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