Agilent Technologies (NYSE:A)
Agilent Technologies was Owens’ sole stock pick in the third quarter of 2012. He purchased 500,000 shares for $38 a share on average. Then, in the fourth quarter, he increased that by 800,000 shares at the same price on average. The size of his total holding at year end was 1.3 million shares.
Rather than a strictly health care company, Agilent develops measurement technology used in chemical analysis, life sciences, diagnostics and genomics and electronic measurement. It has a $15.7 billion market cap and its share price is virtually flat from a year ago, after sinking to its 52-week low in the fourth quarter.
The company has experienced notable average annual growth in the past five years: Revenue increased at 8.5%, EBITDA increased at 30.3%, free cash flow increased at 28.4% and book value increased at 22.6%.
Compared to the fiscal fourth quarter ended Oct. 31, 2011, the company reported a 2% increase in revenues to $1.77 billion in the fiscal fourth quarter of 2012. GAAP net income increased to $425 million, or $1.20 per share, from $289 million, or $0.82 per share the previous year, exceeding guidance.
Each of Agilent’s four divisions experienced revenue declines or were flat over the previous year, except for diagnostics and genomics, whose revenues increased 125% primarily due to the acquisition of Dako.
The company on Jan. 17 introduced a new $500 million share repurchase authorization and raised its dividend 20%, from $0.10 to $0.12 per share, beginning in the second quarter of 2013.
Allscripts-Misys Healthcare Solutions (NASDAQ:MDRX)
Owens bought 2,439,400 shares of Allscripts-Misys Healthcare Solutions in the second quarter at $12 per share on average, then added 1,347,609 shares for the same average price in the fourth quarter. In total he owns 3,787,009 shares.
Allscripts offers a portfolio of information technology for health care markets such as hospitals, physician practices and post-acute organizations. It has a $1.8 billion market cap and its stock dived 48% over the last year.
Allscript’s market value deflated by approximately half in the second quarter of 2012, when Owens found the company attractive enough for his portfolio.
In the past five years, the company grew at the following average annual rates: 14.8% for revenue, 19.7% for EBITDA, 82.8% for free cash flow and 27.5% for book value.
Revenue in the third quarter ended Sept. 30, 2012, of $360.7 million fell short of the third quarter of 2011’s $363.7 million in revenue. Net income of $9.2 million, or $0.05 per share, was also less than the $19.1 million, or $0.10 per share, profit it earned the previous year.
Several third parties have expressed interest in the company, and it is “evaluating strategic alternatives” it said in its third quarter earnings release. It did not guarantee that any transaction would occur and chose not to comment further unless its board did approve a specific transaction.
Allscripts has a 42.6 P/E ratio, 1.4 P/B ratio and 1.3 P/S ratio.
Teva Pharmaceuticals Ltd. (NYSE:TEVA)
Owens has been buying shares of Teva Phamaceuticals since the second quarter of 2011. After adding 1,271,100 shares in the fourth quarter for $40 per share on average, his total holding amounts to 10,021,100 shares.
Israel-based Teva is involved in the development, production and marketing of generic and branded pharmaceuticals and active pharmaceutical ingredients. It has a $32.76 billion market cap and its stock in the past year dropped 17%.
Robust average annual growth rates for the company over the past five years are: 13.6% for revenue, 14.7% for EBITDA, 17.8% for free cash flow and 8.6% for book value.
Revenue increased 14% year over year to $5 billion in the third quarter of 2012, from $4.3 billion. Net loss totaled $79 million, or $0.09 per share, compared to net income of $916 million, or $1.03 per share, in the third quarter of 2011. The loss stemmed from two major charges – one for pending patent litigation, and impairment, primarily for research and development.
Teva has a 15.6 P/E ratio, 1.4 P/B ratio and 1.6 P/S ratio.
To see more of Edward Owens’ fourth quarter moves, see his portfolio here. Also check out the undervalued stocks top growth companies and high yield stocks of Edward Owens.