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Top 5 Emerging Growth Stocks for February

Pharmaceutical, biotech and energy companies poised for growth

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Jazz Pharmaceuticals

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 Pharamceuticals

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

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.

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