12 Healthcare Dividend Stocks With Highest Short Float Ratio

 | Jun 03, 2012 02:56AM ET

The healthcare sector is a major business. Within the stock markets there are 551 companies linked to the sector with a total market capitalization of USD 40.4 trillion. The average sector yield amounts to 3.93 percent and the average P/E ratio is 22.31.

I screened the sector by dividend stocks with the highest amount of short selling stocks, measured by the short float ratio. The ratio shows how many stocks are shorted by investors. Companies with a high ratio of short float have a little upside potential if investors need to close their short position. Twelve dividend stocks from the healthcare sector have a short float ratio of more than 5 percent and six are recommended to buy.

Herbalife (NYSE:HLF) has a market capitalization of $5.16 billion. The company employs 5,100 people, generates revenues of $3,454.54 million and has a net income of $412.58 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $634.12 million. Because of these figures, the EBITDA margin is 18.36 percent (operating margin 16.28 percent and the net profit margin finally 11.94 percent). 

Financial Analysis: The total debt representing 14.08 percent of the company’s assets and the total debt in relation to the equity amounts to 36.35 percent. Due to the financial situation, a return on equity of 78.78 percent was realized. Twelve trailing months earnings per share reached a value of $3.50. Last fiscal year, the company paid $0.73 in form of dividends to shareholders. The stock has a short float of 5.49 percent.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 12.64, P/S ratio 1.51 and P/B ratio 9.26. Dividend Yield: 2.68 percent. The beta ratio is 1.72.