When blockbuster drugs come off patent, it's usually a win for a generic pharmaceuticals maker like Teva, but this Israeli company may benefit from another force: the U.S. government. Never before have both political parties wanted to revamp health care and make cost-cutting a centerpiece of reform. This creates greater incentive for prescription benefits management companies and doctors to favor generic drugs over brand-name treatments.
The stock is trading at a high trailing P/E ratio, but a forward P/E of 11 times projected earnings shows that investors could be getting growth on the cheap.
--K.B.
