5-Star Stocks Poised to Pop: Endo Pharmaceuticals

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, drug company Endo Pharmaceuticals Holdings (NAS: ENDP) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Endo's business and see what CAPS investors are saying about the stock right now.

Endo facts

Headquarters (Founded)Chadds Ford, Penn. (1997)
Market Cap$3.26 billion
IndustryPharmaceuticals
Trailing-12-Month Revenue$2.12 billion
Management

CEO David Holveck (since 2008)

CFO Alan Levin (since 2009)

Return on Equity (Average, Past 3 Years)19.2%
Cash/Debt$692.9 million / $4.03 billion
Competitors

Abbott Labs (NYS: ABT)

Johnson & Johnson (NYS: JNJ)

Pfizer (NYS: PFE)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 96% of the 449 members who have rated Endo believe the stock will outperform the S&P 500 going forward. These bulls include tbonci and All-Star zzlangerhans, who is ranked in the top 0.5% of our community. 

A couple of months ago, tbonci listed several of Endo's positives: "A pharma pick with a broad portfolio including cancer treatments and Percocet along with multiple ongoing trials for new drugs. They have a good sales growth and are great on cash."

Over the next five years, in fact, Endo is expected to grow its bottom line at a solid rate of almost 12% annually. That's faster than much larger rivals like Abbott (9%), Johnson & Johnson (6%), and Pfizer (3%).

CAPS pharma expert zzlangerhans elaborates on the bull case:

Along with Valeant, this represents my experiment with mid-cap pharma stocks on buying sprees that have been beaten down in the recent broad market decline. Despite taking on a boatload of debt to purchase Penwest Pharmaceuticals, Healthtronics, Qualitest, and American Medical Systems in the last year, Endo was coasting with a share price around 40 until disaster hit the markets at the end of July. Since then the stock's trajectory has been almost straight downward. Debt-funded growth and economic uncertainty don't seem to mix well. This plunge could certainly go a lot further before it's done, but I suspect that Endo will be able to wreak profits from their acquisitions quickly enough to cover their debts and transform into a larger pharma with a share price to match.

What do you think about Endo, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Interested in another easy way to trackEndo?Add it to your watchlist.

At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. The Motley Fool owns shares of Abbott and Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Abbott, Johnson & Johnson, and Pfizer, as well as creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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