Quant Picks: 3 Pharmaceutical Companies to Add to Your Portfolio

Pharmaceutical stocks can be good investments. The companies are protected by patents, and those patents allow them to recoup their research and development investments - and then some - should they produce a winner. The industry is also frothy with mergers and acquisitions, which can be profitable for investors. Pharmaceutical company deals are motivated by the desire to beef up the new drug pipeline and streamline heavy research costs. The pharmaceutical industry has outperformed the market so far in 2015. More specifically, the S&P Pharmaceuticals Select Industry Index grew 13.37% versus 4.16% for the S&P 500, on a year to date comparison. Here are some of the best pharmaceutical companies TheStreet Quant Ratings says you should consider looking at. Number 3 is Merck. With a 'B+' rating, the company's strengths can be seen in its expanding profit margins and notable return on equity. 2nd is, Pfizer. This rating is an 'A-.' Pfizer thrives in its solid stock price performance and expanding profit margins. Number 1 is Johnson & Johnson. With an 'A-' rating the company flourishes in its expanding profit margins and notable return on equity. TheStreet Ratings are algorithmic stock picks based on 32 major data points. S&P 500 stocks rated 'buy' yielded a 16.5% return in 2014, beating the S&P 500 Total Return Index by more than 300 basis points. For the full reports on these stocks, you can check out TheStreet.com/QuantRatings.