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Generic drugs are the sweet spot for drug manufacturers. Par Pharmaceuticals Companies, Inc. (PRX) recently reported first quarter results that surprised on the Zacks Consensus by 12.3%. Even with shares soaring to 5-year highs, this Zacks #1 Rank (Strong Buy) is once again a value stock, with a forward P/E of just 10.5.

The New Jersey based pharmaceutical company has two divisions, Par Pharmaceuticals and Strativa Pharmaceuticals. Par produces high barrier-to-entry generics and Strativa makes proprietary drugs.

It has more than 50 currently marketed products in 85 prescription drug families.

Par Beat In the First Quarter

On May 8, Par Pharmaceuticals reported its first quarter results and surprised for the third time in fourth quarters. Earnings per share were 82 cents compared to the consensus at 73 cents.

Revenue rose 7% to $271.5 million from $253.6 million a year ago.

Sales of its biggest product, Metoprolol, which is the authorized generic for all strengths of AstraZeneca's Toprol XL, rose 9.6% to $61.8 million from $56.4 million in the fourth quarter of 2011. The increase was driven by customer buying patterns.

Expansion In India

On Feb 17, the company completed its acquisition of privately-held Edict Pharmaceuticals Private Limited for $20.5 million at closing and $4.4 million repayment of certain pre-close indebtedness.

The Chennai, India-based developer and manufacturer of solid oral dosage generic drugs has a strong pipeline. It currently has 11 ANDAs filed with the FDA.

The Zacks Consensus Estimate For 2012 Jumped

The analysts are more bullish on 2012 than bearish after the first quarter report. 6 estimates have moved higher and 1 lower in the last 30 days.

The 2012 Zacks Consensus Estimate has risen to $3.89 from $3.72 in that time.

That is earnings growth of 15% as the company made just $3.39 in 2011.

Shares Near 5 Year High

It's been a heck of a run for Par's shares since the Great Recession in 2009. Shares recently touched new 5-year highs.

But Par remains a value stock.

In addition to a P/E of 10.5, it has a price-to-book ratio of 2.6. A P/B ratio under 3.0 usually means a company has value. It is also cheaper than its peers, which average a P/B of 1.8.

Par also has other solid fundamentals including a 1-year return on equity of 20.3%.

With double digit earnings growth and a P/E under the average of the S&P 500, this generic drug maker is a good combination of growth and value.

Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.

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