If you're searching for a few biotech beasts to spruce up your portfolio, look no further than our VIP list of Pro Picks this week - five stocks that have serious potential to beat the S&P 500, which InvestingPro subscribers get exclusive access to. And Vertex Pharmaceuticals (NASDAQ:VRTX) leads the pack with sky-high financial health scores and loads of upside ahead.
These biotech companies, which have all blessed investors with high returns, each commands rich cash flows and huge earnings margins that make them robust, rock-solid companies. But even with all their past growth, they still have major upside potential ahead.
And how do we know? Because the biggest signal they all share is an InvestingPro financial health score of at least 2.75. This means cash flow, profitability, price momentum and more are at impressive levels. And which is why, for the last 7 years, stocks with these scores have actually outperformed the market.
Case in point is Vertex Pharma, which develops treatments for cystic fibrosis and 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.
Vertex’s eye-popping 3.76 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.
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