We recently compiled the list of the 7 Best Halal Stocks To Buy Now (Debt Free). In this article, we are going to take a look at where ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) stands against the other debt free halal stocks.
Halal Investing: Debt-Free Stocks, Islamic Funds, and Shariah-Compliant Indices
Islamic equity investing, also known as Halal investing, has gained significant traction recently as Muslim investors seek to align their financial decisions with their religious beliefs. One of the key principles of Islamic finance is the avoidance of interest (riba) and excessive debt, which has led to the emergence of debt-free Halal stocks as a viable investment option. Debt-free Halal stocks are shares of companies that operate by Islamic principles and have zero interest-bearing debt on their balance sheets. These companies finance their operations through retained earnings, equity financing, or other Shariah-compliant methods.
The global halal market, encompassing food, finance, cosmetics, pharmaceuticals, and tourism, is projected to reach a staggering $7.7 trillion by 2025, more than doubling from $3.2 trillion in 2015. Some of the best debt-free Halal stocks to consider investing in currently include Intuitive Surgical, Microsoft, and Abbott Laboratories, among others. Muslim millennials, with an estimated combined spending power of $2.45 trillion, are driving the demand for halal products and services. If we talk about the prices of halal stocks, the average price of halal stocks in the US varies depending on the company and sector. For instance, Saffron Road which is a leading halal food brand, was acquired by Navis Capital Partners in 2022 for an undisclosed amount.
Several Islamic funds offer exposure to US-traded stocks that comply with Shariah principles. One of the most popular and well-established funds is the Amana Growth Fund which is managed by Saturna Capital. This fund invests in a diversified portfolio of Halal stocks listed on major US exchanges, adhering to strict Islamic investment guidelines. Amana Growth Fund has returned 9.3% so far this year, 2.5 percentage points less than the category, earning it a D. Over the last year, Amana Growth Fund has returned 26.0% (grade of D), 10.2% over the previous three years (grade of A), 17.8% over the previous five years (grade of A), and 14.9% annually over the previous ten years (grade of A). Another notable fund is the Azzad Ethical which is managed by Azzad Asset Management. Azzad Ethical seeks to invest in companies that operate by Islamic principles and have strong financial performance and growth potential.
The S&P High Yield Dividend Aristocrats Shariah Index tracks Shariah-compliant companies within the S&P 1500 Composite that have consistently increased their dividend payments for at least 20 years. This index focuses on long-standing, dividend-growing companies adhering to Shariah principles. Currently, the index is down 3.97% for the year but has achieved a 5-year return of 9.11%.
Our Methodology
We chose stocks with the lowest debt-to-equity ratios as part of our research. It’s critical to realize that a company’s debt-to-equity ratio, which expresses how much debt is utilized to finance its assets about shareholders’ equity, is a gauge of its financial leverage. We particularly selected stocks that are held by a large number of hedge funds in addition to having low debt-to-equity ratios. Our stock selection process was based on the combination of substantial institutional interest and financial soundness.
A research scientist looking through a microscope in a lab, symbolizing the biopharmaceutical company’s innovative approach to medical treatments.
ACADIA Pharmaceuticals Inc (NASDAQ:ACAD)
Number of Hedge Fund Holders: 33
D/E Ratio: 0.13
ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD) is a biopharmaceutical company focused on developing and commercializing innovative medicines for central nervous system disorders and rare diseases. The company’s flagship product, NUPLAZID, is approved for the treatment of hallucinations and delusions associated with Parkinson’s disease psychosis. ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD) has an average 12-month price objective of $27.75, with a high of $39.00 and a low of $17.00, based on the projections of 16 Wall Street analysts over the last three months. Compared to the current price of $15.03, this average shows an 84.63% rise.
A total of 33 hedge funds reported holding shares of ACADIA Pharmaceuticals Inc. (NASDAQ: ACAD) in Q1 2024. Baker Bros. Advisors LP remained the largest hedge fund holder with 42.8 million shares worth $792.5 million, comprising 9.9% of their portfolio. EcoR1 Capital LLC held 5.9 million shares worth $110.7 million, accounting for 2.8% of their portfolio.
In Q1 2024, the company reported total revenues of $205.8 million, a 74% increase year-over-year which was driven by:
- NUPLAZID net product sales of $129.9 million, up 10% year-over-year
- DAYBUE net product sales of $75.9 million (no sales in Q1 2023 as it was recently launched)
Their cash, cash equivalents, and investment securities were $470.5 million as of March 31, 2024.
Overall ACAD ranks 2nd on our list of the best debt free halal stocks to buy. You can visit 7 Best Halal Stocks To Buy Now (Debt Free) to see the other debt free halal stocks that are on hedge funds’ radar. While we acknowledge the potential of ACAD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than ACAD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.