This month’s top emerging growth stocks for February come from a range of industries, from energy to energy beverages, but the biggest group — three — are up-and-comers in pharma. Here’s a look at the top five emerging growth stocks for February:
Monster Beverage Corporation
Monster Beverage Corporation (NASDAQ:MNST) used to be known as Hansen Natural Corporation (NASDAQ:HANS), but changed its name and ticker symbol to reflect the growing popularity of its line of Monster energy drinks. This represented a major facelift for the company, which has been in business since the 1930s. The remainder of the company’s product roster is actually very wholesome, with 30 real fruit and spice soda flavors, a number of immune system-boosting drinks, vitamin waters and an array of teas and lemonades.
In recent quarters, the company has reported “monster” sales and profit growth. In the third quarter, sales and earnings popped 24%, and speculation began to heat up that Monster might be an acquisition target by Red Bull or one of the major soft drink companies. Monster will report earnings in late February.
Eagle Rock Energy Partners
Eagle Rock Energy Partners (NASDAQ:EROC) is a player in the midstream and upstream segments of the oil and natural gas business, and the company has natural gas gathering and processing facilities in the Texas Panhandle, east Texas/Louisiana, south Texas, west Texas and the Gulf of Mexico. In total, the company has about 5,500 miles of pipeline, 19 processing plants and 600 operated producing wells.
The company is split about half-and-half between natural gas and oil and has fared well despite the record-low natural gas prices in the U.S. This is because Eagle Rock is a pipeline company that transports natural gas — similar to DCP Midstream Partners (NYSE:DPM) and Plains All American Pipeline (NYSE:PAA). These companies have fared well since all that gas still has to be transported — despite low natural gas prices. And out of all these companies, Eagle Rock pays the highest annual dividend at a whopping 7.7% annual yield! In fact, the company recently increased its latest quarterly dividend by 5% to 21 cents per share.
Looking forward, the analyst community is expecting annual sales growth of 35.1% and earnings growth of 800% in the fourth quarter. In the past three months, the analyst community has revised their consensus earnings estimate 80% higher. Eagle Rock will report fourth-quarter earnings after the market close on Wednesday, Feb. 22, and I want to make sure I’m in line to profit from a strong report.
Jazz Pharmaceuticals (NASDAQ:JAZZ) has two flagship drugs on the market — Xyrem, the only narcolepsy treatment approved by the World Anti-Doping Agency, and Luvox CR, its obsessive compulsive disorder treatment. The company is also conducting late-stage clinical trials on the active ingredient in Xyrem as a possible treatment for fibromyalgia and has other compounds in clinical trials for the treatment of epilepsy and restless legs syndrome.
The company also recently completed its acquisition of privately held Azur Pharma that is expected to significantly boost its underlying sales and earnings. Azur Pharma also is moving its headquarters to Dublin, which should allow Jazz to take advantage of Ireland’s competitive tax rate.
Jazz recently forecast 2012 operating earnings of $4 to $4.15 per share, and sales guidance of $465 million to $490 million — substantially above analysts’ consensus earnings estimate of $3.37 per share and sale estimate of $455.8 million.
Spectrum Pharmaceuticals (NASDAQ:SPPI) is a pharmaceutical company that specializes in oncology, the treatment of cancer, and currently has two treatments on the market: Fusilev, a treatment for advanced colon cancer, and Zevalin, a treatment for a type of lymphoma.
But what really excites me about this company is what it has in its pipeline: Spectrum has more than 10 drugs in either late-stage development or development! This includes Apaziquone, — a treatment for bladder cancer — Belinostat — another lymphoma treatment — and Ozarelix — a treatment of prostate cancer. Plus, the company recently said it expects to file for two new drug applications in 2012. This is a midsize biotechnology company that is about to experience blowout growth. It already is at the top of the industry in terms of return on equity and revenue growth, and I’m excited to see where this agile company will go. Not to mention, in the past three months, the analyst community has revised its estimates more than 100% higher.
Questcor Pharmaceuticals (NASDAQ:QCOR) rounds out my Top 5 list this month. The company’s shares have been exceptionally volatile so far this year, thanks to blog-fueled speculation about its marketing practices. However, after the company participated in a conversation with one of the short-sellers and didn’t indicate any specific examples of improper practices, analysts have concluded that the blog’s initial attacks had little substance. However, shares are still down about 15% year-to-date, making this a solid buying opportunity.
Questcor is a specialist of difficult-to-treat central nervous system disorders and has been particularly successful with its multiple sclerosis treatment, H.P. Acthar Gel. The company also makes Doral, which is used for the treatment of insomnia. In the massive biotechnology industry, Questcor is top-notch in terms of earnings per share growth and return on equity.