Top Healthcare Companies with Healthy P/E Ratio

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Financial ratios can provide insight into a company’s health and future prospects. Out of the many financial ratios, there are a couple which I regularly incorporate for my portfolio management.

Low Price Earnings ratio tells you how many years it is going to take you to recover your investment in the stock. As a rule of thumb, lower the Price Earnings ratio, the better the stock is. However, like any other metrics, you need to pay attention to other ratios and multiples too. You should also pay attention to not compare the PE ratios of the companies spanning across different industries, since different industries tend to have different level of PE ratios.

So, here is my pick of top pharma companies with low PE ratios. These companies are also otherwise healthy entities. You can use this list as the starting point for your healthcare stock portfolio analysis:

AstraZeneca Plc (NYSE:AZN): The company is trading at a healthy Price Earnings ratio of 7.54, which is also far lower than most of its peers. The company stock is currently trading at $47.38, up 0.23 percent from its previous close of $47.27. The stock had opened at the same level of $47.27 and has traded in the range of $47.21 and $47.43 in the current trading session. The company is involved in the business of discovering, developing and marketing medicines for various ailments. Its stock is currently trading above its 20 days moving average price of $47.36 and is in line with its 50 days moving average price of $47.38. AstraZeneca also offers you a healthy dividend yield of 3.9 percent. The company is based out of the United Kingdom and despite the fear of ‘patent cliff’ looks like a solid long term buy.

Teva Pharmaceutical Industries Ltd. (NYSE:TEVA): The company is currently trading at $40.81, up 1.44 percent from its previous close of $40.23. The stock is trading at the Price Earnings ratio of 11.46. It has traded in the range of $36.88 and $46.65 in the past 52 weeks. However, the stock is trading above its 20 days moving average price of $40.8 and 50 days moving average price of $40.78 and is in the positive territory. This Israeli company also offers dividend yield of 2.10 percent. The company is all set to report its third quarter results on November 1, 2012 and it is expected to show negative impact of lower US generic revenue. The company has been rated Buy by Canaccord and its price target is set at $50, thus providing a nice upside from its current price level.  Teva boasts of market capitalization of $35.41 billion.

GlaxoSmithKline Plc (NYSE:GSK): This $114.5 billion company is involved in the business of developing drugs for various health issues and is operational globally. The company stock is currently trading at $46.39, down 0.58 percent from its previous close of $46.66. The stock had opened at $46.21 and has traded in the range of $46.20 and $46.41 in the current trading session. GlaxoSmithKline stock commands the Price Earnings ratio of 13.89 and it has rather attractive dividend yield of 4.60 percent. The company stock is trading above its short term and long term moving average price of $46.38 and $46.37. While the company has solid financial footing and the company earned $8.3 billion in its second quarter of the year. Its operating profit for the quarter stood at $2.23 billion, though it was marginally lower on Year over Year basis. However, for long term investing, you can look at this stock.

Sanofi SA (NYSE:SNY): The company is currently trading at $44.90, down 0.64 percent from its previous close of $45.19. The stock is trading at the Price Earnings ratio of 14.32. It has traded in the range of $31.61 and $45.20 in the past 52 weeks. However, the stock is trading below its 20 days moving average price of $44.96 and 50 days moving average price of $45. Sanofi’s dividend yield stands at 3.90 percent and the company recently set up partnership with Coca Cola for developing fortified drinks. The companies are likely to introduce new drinks in France this fall. The company commands the market capitalization of $118.54 billion and its stock is trading at beta of 1.03. Sanofi has been rated Buy by Bank of America. The company stock recorded its new 52 week high in its previous trading session.

 

 

 

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