Here is your VIP list of Pro Picks for the week, offered exclusively to InvestingPro subscribers: a hand-picked selection of S&P 500 stocks that InvestingPro awarded a high financial health score of at least 2.75 out of 5.00.
This week, we've put together a list of 2.75+ scored stocks that are also biotech beasts with magnificent cash flows and EBITDA margins, and which look to have share upside ahead.
Historically, stocks that rated above 2.75 have a high potential to outperform the S&P 500. For a deeper dive into how we make our Pro Picks, read more here.
Vertex Pharma roars ahead
Vertex Pharmaceuticals Inc (NASDAQ:VRTX), which develops treatments for cystic fibrosis, has been very good to investors: Its return on common equity comes in at around 25%, and InvestingPro’s fair value estimate predicts it has nearly 20% more upside from here. Its eye-popping 3.76 InvestingPro financial health score is thanks to the company firing on all cylinders: Its profitability, earnings growth, and cash flow are all blazing, and shares have strong price momentum as well. And with the company’s spectacular 50% margin on EBITDA (earnings before interest, taxes, depreciation and amortization), Vertex investors should sleep well at night. Shares are up some 22% for the year to $348.09.
Gilead could be a buy on the dip
Biotech behemoth Gilead Sciences (NASDAQ:GILD) has rock-solid profitability that props up its excellent 3.06 InvestingPro financial health score, and it has also delivered a wonderful 27% return on common equity for investors. Even so, analysts figure shares have more than 14% upside from here, and InvestingPro’s fair value calculations put that number even higher: 36%. The stock has taken a 6.6% dip to $79.75 from the start of the year, so this may be a prime moment to pick up some Gilead shares for your portfolio.
ResMed profits handsomely
ResMed (NYSE:RMD), which develops medical devices and cloud-based health software, has been a rock star for those smart enough to plunk money into the stock over the past decade: Shares are up an amazing 450% in the past 10 years. Yet analysts still think there’s substantial upside from current levels, and the company continues to pocket fat profits that support its high 3.07 InvestingPro financial health score. Shares are up some 11% for the year at $231.65.
Edwards Lifesciences swimming in cash
Edwards Lifesciences (NYSE:EW), a cash cow with unleveraged cash flow of about $1.4 billion, has achieved an InvestingPro financial health score of 3.15 thanks to that figure and its excellent profitability health. After a 700% return over the past 10 years, both analysts and its InvestingPro fair value say the medical technology maker has even more upside from current levels. Shares are up about 1% for the year to $88.74.
Stryker's healthy earnings
Another medical technology name, Stryker (NYSE:SYK), has $2.76 billion in free cash flow with a very healthy EBITDA margin of about 25%. Owing to its tremendous profitability, the stock commands a solid 2.78 InvestingPro financial health score. It has also gifted investors with massive returns over the past several years, with a 16% climb from the start of the year - but Wall Street still thinks it has significant upside ahead. Shares closed Friday at $284.71.