The strong U.S. dollar is crushing the sales and earnings of big multi-international stocks that dominate the S&P 500. As a result, there is a massive parade out of multi-international companies into more domestic, small- and mid-cap stocks.
There’s no denying it; we are now in the midst of a small- to mid-cap resurgence. The last time we had a “seismic shift” out of large-cap and mega-cap stocks was way back in 2000 when the S&P 500 became too top heavy.
At that time, mega-cap stocks flamed out and the tail end of the S&P 500 did much better, leading the overall stock market for the next seven years.
This time around, multi-international stocks are faltering in the wake of the strong U.S. dollar, and they are passing the baton to small- and mid-cap domestic stocks. In particular, stocks in drug manufacturing, biotechnology and medical appliances have been having a decently strong 2015 so far.
Let’s take a look at six health-related stocks to buy as springs blooms:
Health-Related Stocks to Buy – AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG)
Our first new buy for March is a specialty pharmaceutical company focused on developing therapies that improve patients’ lives. Based in Massachusetts, AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG) is most known for its therapeutic intravenous iron compound, Feraheme, that’s used to treat iron deficiency anemia in adults with chronic kidney disease.
Feraheme is marketed in the U.S., as well as Canada and Europe, though it is more commonly known as Rienso in the European Union. AMAG Pharmaceuticals sells the treatment to authorized wholesalers and specialty distributors.
In addition, AMAG Pharmaceuticals markets MuGard, Mucoadhesive Oral Wound Rinse, which is used to manage oral mucositis/stomatitis and all types of oral wounds, including canker sores and traumatic ulcers. Recently, AMAG Pharmaceuticals acquired Lumara Health, which is focused on advancing women’s health. Lumara Health currently has a clinical trial underway for Makena, a treatment to reduce the risk of preterm birth.
In the fourth quarter, AMAG Pharmaceuticals sales soared 145.6% to $53.3 million, up from $21.7 million Q4 2013. Due to an extraordinary tax benefit from an acquisition, AMAG stock’s earnings rose to $143 million, or $4.67 per share, compared to a loss of $3.6 million or 17 cents per share. Excluding this extraordinary tax benefit, AMAG posted an operating loss of 2 cents per share/
For the first quarter, the analyst community is estimating sales of $84.66 million, which translates to 306.3% annual sales growth, and operating earnings of 78 cents per share, up from a loss of 33 cents per share in Q1 2014. AMAG is clearly on the verge of transitioning from negative operating earnings to positive operating results.
Please note, AMAG is a speculative buy and is appropriate for a small allocation in your portfolio.
Health-Related Stocks to Buy – Inogen Inc (NASDAQ:INGN)
Our third recommendation this month is medical technology company, Inogen Inc (NASDAQ:INGN). Inogen was founded 14 years ago with the goal of advancing oxygen therapy technology, which is used by more than 4.5 million patients worldwide.
Previously, patients suffering from a lung condition had to lug around bulky oxygen tanks. Inogen developed portable oxygen concentrators that provide long-term oxygen therapy to patients with obstructive pulmonary disease and other chronic respiratory conditions.
INGN’s Inogen One systems concentrate the air around them to provide a single source of supplemental oxygen — and they’re small and lightweight, making them easy for use at home or while traveling.
In the third quarter, Inogen’s sales rose 48.6% to $29.4 million, compared to $19.8 million in Q3 2014. Operating earnings surged 120% to $2.1 million or 11 cents per share, up from $774,000 or 5 cents per share.
Please note, INGN is also a speculative buy, and its shares are thinly traded and should only be bought via a limit order within 10 cents of the previous day’s close.
Health-Related Stocks to Buy – Molina Healthcare, Inc. (NYSE:MOH)
Another healthcare-related buy this month is Molina Healthcare, Inc. (NYSE:MOH), a healthcare company providing health insurance plans, medical clinics and health information management solutions to low-income families and individuals. Molina Healthcare is one of the only healthcare organizations to provide all three.
Molina Healthcare provides health plans in 11 states and services to about 2.6 million members who were eligible for Medicaid, Medicare or another government-sponsored health care program. In five states, MOH also runs medical clinics that provide primary care services such as immunizations and flu shots.
Molina Healthcare’s subsidiary, Molina Medicaid Solutions, provides design, development, implementation, business process outsourcing and information technology development and administrative services to Medicaid agencies in five states and the U.S. Virgin Islands.
In the fourth quarter, Molina Healthcare’s revenues rose 63.7% to $2.80 billion, up from $1.71 billion in Q4 2013. Earnings surged to $33.8 million, or 69 cents per share, compared to a loss of $9.1 million, or 20 cents per share.
Analysts were expecting earnings for 60 cents per share on sales of $2.82 billion. So, Molina Healthcare posted slight sales miss and a 15% earnings surprise.
Looking forward to the current quarter, the consensus estimate is for 380% annual earnings growth and 52.3% annual sales growth. Molina Healthcare’s enrollment has risen 37.8% in the past year, and MOH is also clearly benefiting from the rush to enroll in a health plan, rather than pay the Obamacare fee.
Health-Related Stocks to Buy – Abaxis Inc (NASDAQ:ABAX)
We just added Abaxis Inc (NASDAQ:ABAX) in February — and ABAX has risen in my ranks this month. Abaxis is a U.S.-based healthcare company that supplies point of care blood analyzers to medical and veterinarian markets.
During Abaxis’ third-quarter 2015, sales increased 46% to $59.5 million, while earnings per share surged 86% to 26 cents per share.
In the current quarter, analysts have forecast 58.8% annual earnings growth and 31.7% annual sales growth — and have revised estimates slightly higher in the past two months.
Remember, ABAX is a thinly traded stock and should only be bought via a limit order.
Health-Related Stocks to Buy – Omega Healthcare Investors Inc (NYSE:OHI)
Omega Healthcare Investors Inc (NYSE:OHI) is also a new recommendation from the healthcare industry. OHI is a real estate investment trust (REIT) that invests primarily in long-term healthcare facilities, and like all REITs, Omega Healthcare must distribute at least 90% of its income to shareholders.
So, OHI boasts an attractive 5.3% annual dividend yield — and has increased its quarterly dividend by one cent for the past 10 quarters.
On Feb. 23, OHI reported that fourth-quarter funds from operations were $87.4 million, or 68 cents per share. Adjusted earnings were 72 cents per share, which was in-line with analysts’ expectations. Revenues were $131.3 million, beating estimates for $101.12 million by 29.8%.
OHI is a conservative buy.
Health-Related Stocks to Buy – IGI Laboratories, Inc. (NYSEMKT:IG)
IGI Laboratories, Inc. (NYSEMKT:IG) is our last health-related stock to buy this morning after releasing solid fourth-quarter earnings and sales.
Fourth-quarter revenues soared 104% year over year to $13.7 million, which beat analysts’ estimates for $11.8 million by 15%. Net income surged 700% to $5.6 million, up from $0.7 million Q4 2013. Adjusted earnings were 6 cents per share, in line with analysts’ estimates.
Looking forward to the current quarter, IG is forecast to report 500% annual earnings growth and nearly 80% annual sales growth.
In 2015, IGI Laboratories’ management expects to file 20 more ANDAs with the Food and Drug Administration, up from 11 ANDAs in 2014 and adding to its current 22 ANDAs on file with the FDA.
IG stock pulled back earlier in March on profit-taking, but I view a dip as a good buying opportunity. IG is a moderately aggressive buy.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
