Pharmaceuticals, healthcare, biotechnology its an attractive investment business.
Most of the money goes into the biggies, like GlaxoSmithKline and AstraZeneca, but theres a whole host of smaller companies out there with great prospects. And some of their shares have been flying:
Wound care
Look at Advanced Medical Solutions (LSE: AMS), for example. Its a company with a market capitalisation of around 300m, and its in the unglamorous-sounding field of wound care technology. But its serious business, and Advanced Medical shares are up 16.5% over the past 12 months to 143p, having put on nearly 250% over five years.
Five years of strong earnings growth lie behind that, though the shares are now on a P/E of over 20 with forecast growth slowing a little. But at results time in March, CEO Chris Meredith told us he was confident that AMS is well placed to drive growth.
Not a screamingly cheap share, but it looks like a quality company with some key product strengths.
Boring is good
Then theres UDG Healthcare (LSE: UDG), a bigger company at around the 1.3m market cap level, which on the face of it appears even less glamorous. Based in Dublin, the firm provides services to the medical industry sales and marketing, wholesaling, packaging and so on.
And its shares have done even better over the past year at 540p, theyre up 54%.
With double-digit EPS rises forecast for this year and next, were still looking at growth pricing and a forward P/E of 23 this year. But it looks like a business that will remain in demand, and its first quarter this year has seen it off to a strong start with trading well ahead of last year.
The biggest winner
Ive saved the highest one-year flyer for last. Its Vernalis (LSE: VER), the smallest of the three with a market cap of a bit under 270m. Vernalis shares have more than doubled in 12 months to 61p, having been sent soaring by approval on 1 May for its Tuzistra branded extended-release cough treatment, developed in conjunction with Tris Pharma Inc.
CEO Ian Garland called it a very significant moment in the evolution of Vernalis to a commercial stage speciality pharmaceutical company, and all eyes are now on getting the new product to market for the coming 2015-16 cough-cold season in the US.
What about valuation? Vernalis is not yet profitable, so there arent any meaningful traditional ratios available yet but it could easily be the most exciting of the three, and is definitely one to watch.
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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.