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Philip van Doorn

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Sept. 22, 2017, 7:00 a.m. EDT

These life-science stocks provide biotech-like performance without the gyrations

Life-science equipment-and-service providers have retuned as much as 60% this year

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By Philip van Doorn, MarketWatch


Bloomberg News
A technician looks at a monitor for an Illumina-made DNA-sequencing machine.

Are you looking to invest in companies with a good shot at growing even faster than the U.S. technology giants that have been performing so well?

Michael Santoli pointed out in this CNBC article that the S&P 500 Life Sciences Tools and Services subsector has greatly outperformed the broader market this year. Following his lead, we have taken a deeper dive to highlight more of the growth leaders that distribute and sell supplies and devices to biotechnology and other health-care companies.

The S&P 500 Life Sciences Tools and Services subsector is made up of seven large-cap companies, and the S&P Composite 1500 Life Sciences Tools and Services subsector adds small-cap and mid-cap companies for a total of 14 stocks.

Here’s how the S&P Composite 1500 Life Sciences Tools and Services subsector has performed this year against the S&P Composite 1500 health-care sector and the entire S&P 1500:


FactSet

The longer-term story also is a good one. Here’s a three-year total return comparison:


FactSet

And five years:


FactSet

In July, Andy Acker and Ethan Lovell, the portfolio managers of the Janus Henderson Global Life Sciences Fund, said drug approvals have been increasing amid a friendly political climate, buoying biotech research. That helps explain this year’s success for the S&P Composite 1500 Life Sciences Tools and Services subsector, but for long-term investors, the future looks bright because of innovation and the aging population.

This group of companies also faces lower “headline risk” (bad news stories) than biotech research companies, where so much hangs on successful outcomes for drug trials.

Also see: More than half of these high-yield dividend stocks are on sale

To help identify the most interesting stocks in the subsector, here’s the list, ranked by changes in sales per share over the past 12 reported months. We have also included gross profit margins:

Company Ticker Sales per share - past 12 months Sales per share - year-earlier 12-month period Change in sales per share Gross margin - past 12 months Gross margin - year-earlier 12-month period
Charles River Laboratories International Inc. /zigman2/quotes/203944031/composite CRL $37.44 $31.37 19% 35.59% 36.93%
Luminex Corp. /zigman2/quotes/207378371/composite LMNX $6.92 $5.82 19% 61.58% 68.26%
Bio-Techne Corp. /zigman2/quotes/203973516/composite TECH $15.01 $13.37 12% 65.03% 67.46%
Mettler-Toledo International Inc. /zigman2/quotes/208535486/composite MTD $97.93 $87.85 11% 56.16% 55.08%
Thermo Fisher Scientific Inc. /zigman2/quotes/201150432/composite TMO $48.56 $44.02 10% 46.70% 45.15%
Cambrex Corp. /zigman2/quotes/202999802/composite CBM $15.55 $14.11 10% 42.78% 40.95%
Illumina Inc. /zigman2/quotes/203509482/composite ILMN   $16.86 $15.56 8% 67.58% 70.84%
Agilent Corp. /zigman2/quotes/207081878/composite A $13.47 $12.49 8% 53.41% 51.96%
Waters Corp. /zigman2/quotes/205633949/composite WAT $27.32 $25.55 7% 58.76% 58.51%
Parexel International Corp. $46.90 $44.87 5% 26.22% 26.53%
INC Research Holdings Inc. Class A $28.44 $27.42 4% 21.60% 21.48%
Bio-Rad Laboratories Inc. Class A /zigman2/quotes/207953537/composite BIO $70.02 $68.76 2% 55.61% 56.43%
PerkinElmer Inc. /zigman2/quotes/203769792/composite PKI $19.73 $20.43 -3% 45.75% 44.79%
Quintiles IMS Holdings Inc. $42.81 $48.81 -12% 26.17% 28.04%
Source: FactSet

You can click on the tickers for more information, including news coverage, price ratios, charts and financial reports.

/zigman2/quotes/203944031/composite
US : U.S.: NYSE
$ 134.28
-1.79 -1.32%
Volume: 455,783
Oct. 18, 2019 6:30p
P/E Ratio
30.30
Dividend Yield
N/A
Market Cap
$6.55 billion
Rev. per Employee
$154,156
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/zigman2/quotes/207378371/composite
US : U.S.: Nasdaq
$ 20.04
-0.15 -0.72%
Volume: 147,624
Oct. 18, 2019 4:00p
P/E Ratio
N/A
Dividend Yield
1.80%
Market Cap
$902.52 million
Rev. per Employee
$319,654
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/zigman2/quotes/203973516/composite
US : U.S.: Nasdaq
$ 200.25
-1.25 -0.62%
Volume: 132,256
Oct. 18, 2019 4:00p
P/E Ratio
81.13
Dividend Yield
0.64%
Market Cap
$7.62 billion
Rev. per Employee
$350,853
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/zigman2/quotes/208535486/composite
US : U.S.: NYSE
$ 680.50
+9.68 +1.44%
Volume: 160,348
Oct. 18, 2019 6:30p
P/E Ratio
31.62
Dividend Yield
N/A
Market Cap
$16.75 billion
Rev. per Employee
$183,474
loading...
/zigman2/quotes/201150432/composite
US : U.S.: NYSE
$ 281.42
-0.17 -0.06%
Volume: 1.19M
Oct. 18, 2019 6:30p
P/E Ratio
32.11
Dividend Yield
0.27%
Market Cap
$112.70 billion
Rev. per Employee
$347,971
loading...
/zigman2/quotes/202999802/composite
US : U.S.: NYSE
$ 59.51
+0.02 +0.03%
Volume: 1.10M
Oct. 18, 2019 6:30p
P/E Ratio
37.30
Dividend Yield
N/A
Market Cap
$2.01 billion
Rev. per Employee
$306,689
loading...
/zigman2/quotes/203509482/composite
US : U.S.: Nasdaq
$ 309.44
-1.11 -0.36%
Volume: 598,072
Oct. 18, 2019 4:00p
P/E Ratio
49.15
Dividend Yield
N/A
Market Cap
$45.49 billion
Rev. per Employee
$456,575
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/zigman2/quotes/207081878/composite
US : U.S.: NYSE
$ 74.57
-0.35 -0.47%
Volume: 2.12M
Oct. 18, 2019 6:30p
P/E Ratio
22.31
Dividend Yield
0.88%
Market Cap
$23.08 billion
Rev. per Employee
$336,959
loading...
/zigman2/quotes/205633949/composite
US : U.S.: NYSE
$ 215.75
+0.99 +0.46%
Volume: 348,866
Oct. 18, 2019 6:30p
P/E Ratio
27.41
Dividend Yield
N/A
Market Cap
$14.40 billion
Rev. per Employee
$336,101
loading...
/zigman2/quotes/207953537/composite
US : U.S.: NYSE
$ 343.27
-0.18 -0.05%
Volume: 149,724
Oct. 18, 2019 6:30p
P/E Ratio
11.60
Dividend Yield
N/A
Market Cap
$10.23 billion
Rev. per Employee
$280,995
loading...
/zigman2/quotes/203769792/composite
US : U.S.: NYSE
$ 83.10
+0.08 +0.10%
Volume: 426,913
Oct. 18, 2019 6:30p
P/E Ratio
36.70
Dividend Yield
0.34%
Market Cap
$9.23 billion
Rev. per Employee
$222,240
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