Biogen Idec Inc. (BIIB), Alexion Pharmaceuticals, Inc. (ALXN): Best-Run Biotech Companies

Honorable mentions

A couple of biotech companies came close to making our top three. Amgen, Inc. (NASDAQ:AMGN) saw a 10.98% ROIC over the past year and has a five-year average of 10.7%. The biotech grew earnings by nearly 20% over the past year, but its five-year earnings growth of nearly 17% isn’t as strong.

Celgene Corporation (NASDAQ:CELG) also performed well in our key metrics. The company’s ROIC over the past year was 17%, but the five-year average of 4.1% dragged its overall ranking. Celgene Corporation (NASDAQ:CELG)’s earnings growth of 432% over the last five years places the company high in the pecking order.

Well-run good runs

Do well-run biotech companies under our definition also have stocks that perform well? Take a look at the nice runs enjoyed by the top three companies and the two honorable mentions.

BIIB data by YCharts.

Questcor leads the pack by far, although the stock has exhibited considerable volatility along the way. The other top three biotech companies, Alexion and Biogen, have also seen strong share appreciation. Amgen, Inc. (NASDAQ:AMGN) and Celgene haven’t done badly, either, with both stocks doubling or close to it over the past five years.

There’s no guarantee, of course, that well-run biotech companies will always prove to be successful investments. Too many risks exist in the world of biotech that can bring a stock down quickly. However, generally speaking, biotech companies (or any company, for that matter) that consistently show strong ROIC and earnings growth tend to be good picks over the long run. The best-run companies often enjoy the best stock runs.

The article 3 Best-Run Biotech Companies originally appeared on Fool.com and is written by Keith Speights.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Celgene.

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