Is this the best value healthcare stock that nobody is talking about?

Pharmaceutical company Mayne Pharma Group Ltd (ASX: MYX) is a quickly becoming a new star in the healthcare industry. It produces generic and branded drugs for ailments like pain, infections and acne, but it may have slipped by investors. Here’s why it could be the best value healthcare stock that nobody is talking about:

It’s part of the massive global healthcare trend

All long-term investors should have at least some exposure to the massive global healthcare trend which will last well into the next decade. According to the ‘2014 Global Healthcare Outlook’ report by Deloitte, global healthcare spending is expected to grow at 5.3% per year between 2014 and 2017.

This is likely to benefit most companies exposed to healthcare, from the big players like ResMed Inc. (CHESS) (ASX: RMD), to the emerging stars like Global Health Limited (ASX: GLH).

It’s not a dodgy biotech stock

Mayne Pharma’s focus on products with proven merit and demand means the company has quickly established its market presence and established earnings. This significantly reduces risk compared to some of the cash-burning biotech stocks with big promise, but also big uncertainty and big dilution risk as they fund research with new share issues.

It has fast growing earnings and a huge profit margin

For the full year FY14 Mayne Pharma reported a 72% jump in revenue and a 92% increase in gross profit to $75.1 million. The growth was driven to a certain extent by acquisition earnings, but also new product launches and increased sales of existing products.

Most exciting is the company’s massive 52.4% gross profit, a jump from 46.7% in FY13.

It’s reinvesting in R&D

Mayne Pharma invested around 15% of sales revenue in R&D in 2014, and has numerous new products in the pipeline for release. There are currently 17 products pending FDA approval in the U.S. and 16 products pending approval from Australia’s TGA, though the company acknowledges that the timelines for approval are uncertain. R&D remains a continued focus going forward which will help to drive growth.

It’s not ridiculously overpriced

Although shares have risen strongly over the last 12 months, in my view it still doesn’t account for the long-term growth potential. At a current share price of $0.79 Mayne Pharma sells for 21 times 2014 earnings. With the potential for new approvals, a big product development pipeline and long-term volume growth, Mayne Pharma could be the best value healthcare stock that investors are yet to discover.

It could help you get rich ...

Buying great-value companies can help you to build your way to wealth -- so don't miss The Motley Fool's brand-new FREE guide, "Your 10 Step Guide to Making $1 Million in the Market". This new, free report contains every detail you need to know now to build your personal fortune! Simply click here to secure your FREE copy.

Motley Fool contributor Regan Pearson owns shares in Global Health

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.