6 Cash-Rich Healthcare Stocks Look Undervalued

6 Cash-Rich Healthcare Stocks Look Undervalued

Research  these Stocks on Kapitall’s Playground Now

 
research now

Everyone loves finding some crumpled up cash in the pocket of the jacket that's been in storage all summer. To the disorganized, this can feel like winning the lottery. But is extra cash always a good thing?

Unfortunately the answer isn't that simple. Sometimes it's good to have some extra cash lying around just in case – for instance Ford (F) was able to use it to whether the financial crisis. In fact, certain industries almost uniformly keep large capital reserves around, especially if they're in manufacturing, automobile production, utilities and raw goods - emergency funds in case of a price drop or a glitch in their supply chains. 

Large amounts of cash held by a company can mean two things. It could indicate that a company is playing it safe, or trying to weather a bearish market. However it could also mean that executives are trying to enrich themselves by earmarking extra cash for glamor projects. Worst of all, investors should always keep an eye out for companies that don't seem to know what to do with their cash. This is a sure-fire sign of a leadership crunch, or a failure on the part of executives to plan for long-term growth.

To create the list below, we looked at leverage free cash flow (LFCF) - the amount of cash a company has left over after they have paid off all of their debt. LFCF is often compared with enterprise value (EV) - the sum of all of the firm's value from all of its ownership sources: market cap, debt, and preferred shares. One way to tell if a company is undervalued is if the ratio of cash flow to enterprise value is high (over 10%). We ran a screen on companies that are cash-rich at the moment, and focused on an industry where this isn't the norm – in this case healthcare. To be on the safe side, capped our screen at stocks with an LFCF/EV ratio of at least 15%.

Are these stocks hedging their bets or wasting their cash? Use the charts below to begin your own analysis. 

The List 

1. Auxilium Pharmaceuticals Inc. (AUXL, Earnings, Analysts, Financials):Operates as a specialty biopharmaceutical company primarily in the United States.

Market cap at $878.07M, most recent closing price at $17.83.

Levered free cash flow at $99.00M vs. enterprise value at $649.06M (implies a LFCF/EV ratio at 15.25%).

 

 

2. Cumberland Pharmaceuticals, Inc. (CPIX, Earnings, Analysts, Financials):Engages in the acquisition, development, and commercialization of branded prescription products for the hospital acute care and gastroenterology markets.

Market cap at $105.04M, most recent closing price at $5.60.

Levered free cash flow at $5.36M vs. enterprise value at $34.35M (implies a LFCF/EV ratio at 15.6%).
 

 

3. Invacare Corporation (IVC, Earnings, Analysts, Financials):Designs, manufactures, and distributes medical equipment and supplies for the non-acute care environment, including the home health care, retail, and extended care markets.

Market cap at $499.27M, most recent closing price at $15.65.

Levered free cash flow at $92.59M vs. enterprise value at $581.66M (implies a LFCF/EV ratio at 15.92%).
 

 

4. Providence Service Corp. (PRSC, Earnings, Analysts, Financials):Provides and manages government sponsored social services and non-emergency transportation services.

Market cap at $369.36M, most recent closing price at $28.09.

Levered free cash flow at $64.72M vs. enterprise value at $414.47M (implies a LFCF/EV ratio at 15.62%).
 

 

5. Spectrum Pharmaceuticals, Inc. (SPPI, Earnings, Analysts, Financials):Spectrum Pharmaceuticals, Inc., a commercial-stage biotechnology company, primarily focuses on oncology and hematology.

Market cap at $489.43M, most recent closing price at $8.27.

Levered free cash flow at $85.55M vs. enterprise value at $413.34M (implies a LFCF/EV ratio at 20.7%).
 

 

6. Threshold Pharmaceuticals Inc. (THLD, Earnings, Analysts, Financials):Engages in the discovery and development of drugs targeting the microenvironment of solid tumors for patients living with cancer.

Market cap at $311.24M, most recent closing price at $5.51.

Levered free cash flow at $31.75M vs. enterprise value at $203.38M (implies a LFCF/EV ratio at 15.61%).

 

 

(List compiled by James Dennin. Analyst ratings sourced from Zacks Investment Research. All other data sourced from Finviz.)

Analyze These Ideas: Getting Started

Dig Deeper: Access Company Snapshots, Charts, Filings

New to Kapitall?

1. New to the site? Click here to register for a free account, and gain access to more tools and data
2. Looking for more investing ideas like this? Click here to sign up for your free copy of Kapitall Weekly
3. Follow us on SeekingAlpha, TheStreet and Twitter

ABOUT KAPITALL WIRE

Kapitall Wire, which is not a broker/dealer, offers free cutting edge investing ideas, lively commentary and timely analysis of companies enhanced by interactive tools. And the Investing 101 section breaks complex concepts down to their basics, offering education to novices that doubles as a refresher course for more seasoned investors.

Kapitall Wire is a division of Kapitall Inc. Securities products and services are offered by Kapitall Generation, LLC, member FINRA/SIPC . Kapitall Generation, LLC is a wholly owned subsidiary of Kapitall, Inc.

playfor100kwirebanner2png

7 Responses to “6 Cash-Rich Healthcare Stocks Look Undervalued”

  1. Hales says:

    Worst of all, investors should always keep an eye out for companies that don't seem to know what to do with their cash. This is a sure-fire sign of a leadership crunch, or a failure on the part of executives to plan for long-term growth truthsaboutcellulite.net

  2. Maariyah says:

    Worst of all, investors should always keep an eye out for companies that don't seem to know what to do with their cash. This is a sure-fire sign of a leadership crunch, or a failure on the part of executives to plan for long-term growth. http://www.cityfitness.net/

  3. Aaliyah says:

    Nice post i really glad to read this informative post, thanks to share :) summer camp

  4. abdullah says:

    It could indicate that a company is playing it safe, or trying to weather a bearish market. However it could also mean that executives are trying to enrich themselves by earmarking extra cash for glamor projects Top Growth Stocks To Buy

  5. Engages in the acquisition, development, and commercialization of branded prescription products for the hospital acute care and gastroenterology markets.

  6. Big Tent says:

    Good Job, I am happy to find this good Pages

  7. Olivia says:

    Large amounts of cash held by a company can mean two things. It could indicate that a company is playing it safe, or trying to weather a bearish market http://nowonshelter.com/

Leave a Reply

Protected by WP Anti Spam

wirebannerscompetepng