Garages are apparently some of the best work spaces in America. Hewlett-Packard Company (NYSE:HPQ) started in a garage. Apple Inc. (NASDAQ:AAPL) started in a garage.
While Actavis plc (NYSE:ACT) didn’t literally start in a garage, it was certainly a humble beginning for what is now the third-largest generic drug manufacturer and one of the largest pharmaceutical companies in the world.
Actavis began in 1983 with funding from family and friends. ACT had six employees, counting the two founders.
Today, ACT has 40 manufacturing facilities in five continents providing Actavis with a core leadership position in modified release products, solid oral dosages, transdermals, semi-solids, liquids and injectables. Actavis also has 27 facilities for research and development around the globe.
How things have changed indeed.
In the past three decades, ACT has been growing via acquisition and building a portfolio of generic and brand name drugs that are the envy of the industry.
Actavis’ generic line centers around analgesic acetominaphen and a higher strength blend with opioid hydrocodone. Think Tylenol and and the painkillers they give you after an operation or surgical procedure, and with the growth and encouragement of outpatient procedures, these prescription rates are going up, not down.
ACT also has scored an impressive portfolio of name brand drugs, including Namzaric a promising drug for Alzheimers and the entire Botox line from its merger with Allergan, Inc. (NYSE:AGN).
Yes, last week, the acquisition of Allergan for $70.5 billion finally became official.
Now that the merger has closed, my subscribers and I currently own one of the world’s top 10 pharmaceutical companies in terms of sales. The combined company is expected to rake in more than $23 billion in sales, which translates to 76% annual sales growth.
Actavis plans to adopt the Allergan name later this year, but in the meantime, ACT shares are trading at under 15 times forward earnings, and there’s plenty of upside potential from here.
Last quarter numbers reflect the continued strength Actavis is still showing. For its most recently released quarterly numbers (announced Feb. 18), ACT reported $3.91 earnings per share for the quarter, beating the consensus estimate by 24 cents per share.
Actavis had revenue of $4.01 billion for the quarter, compared to the consensus estimate of $3.84 billion. ACT’s revenue was up 44.2% for the quarter on a year-over-year basis.
ACT stock still has plenty of legs. Actavis remains a buy below $339.
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.
