WINDSOR, ONTARIO / ACCESSWIRE / September 22, 2015 / The Wealthy Biotech Trader (or "WBT"), an investment newsletter focused on showing everyday investors new opportunities in rapidly growing, little-known, biotech, pharma, medical device and general healthcare stocks making news and subsequent market moves, would like to alert traders about several trade ideas within the very healthy medical device sector.
The broader market is down about 1% over the past 12 months. Not very impressive. But measured from the summer's peak to the trough of late August, the overall market (S&P 500) fell almost 15%. We feel it will fall a bit more after this recent rebound, most likely in the 1725 range for the S&P 500--or about 12% lower from here. But that should excite traders as that is when they should be buying; when others are the most fearful--those are the entry points that make traders money.
We like Healthcare for the long-term as we like to play where the money is flowing. We feel a lot of the retail traders have abandoned energy and mining and are now looking at pharma, biotech and medical devices. In the same trailing 12-month period that the S&P 500 fell by 1%, the iShares US Medical Devices ETF (NYSE: IHI) has returned over 17%, and smart investors know strong relative performance is the bellwether of a winning stock or industry.
With an aging population, as well as drug and device companies developing new expensive treatments almost daily (Hillary Clinton tweeted about it today), there will always be opportunities to find the next Apple or Google and get in early to make outsized returns. That's why we like smaller, rapidly growing companies in the healthcare space which are "disruptive" to the norm and creating paradigm shifts. An example of a paradigm shift would be when the media snapped a few pics of Paris Hilton using a Blackberry and then they became ubiquitous across the globe. Or when Uber figured out consumers would rather be picked up in seconds, in a clean Suburban, with a friendly driver for the same or lower price compared to a traditional cab--now they're worth more than $50 billion. These opportunities happen all the time.
A classic story of a rapidly growing, paradigm shifting healthcare company is Inogen, Inc. (NASDAQ: INGN). Inogen has essentially built a better mousetrap with their oxygen concentrators. Patients diagnosed with a condition requiring them to use oxygen therapy used to have to wheel around clunky tanks not knowing when they will run out of oxygen. Now INGN's oxygen concentrator runs off super long use batteries and simply uses normal air to create oxygen, on demand, for the user. They only weigh about 3-5 pounds too. They are very smart, and are quickly becoming the only option in a $7 billion global market, and with 2015 sales guidance in the $150 million range, this Company has plenty of room to grab market share and plat it firmly on their income statement. INGN looks to WBT as a forever stock and would be in buy-range if we see a pullback to the $45 range.
Another company blazing trails and turning an industry on its head is PositiveID (OTC: PSID). PSID is a medical device company developing the Firefly Dx, a handheld device which is essentially a "lab in the hand," which, when fully developed, could test anyone or anything for contamination or disease ranging from Ebola, to E.coli, to influenza, to MRSA. The Firefly is being designed to test for any of these pathogens, from the palm of the user's hand, within 20 minutes at a much lower cost than existing methods. Traditionally if one wanted to test a person, an item or even food for contamination they would have to take a sample to a lab, which in and of itself puts the sample at risk for contamination not to mention takes a minimum of 4 hours to provide results and is very expensive.
To our knowledge, this is a one of kind product which would address a somewhat untapped $27 billion market (or segments thereof). The breadth of usage of the Firefly Dx can be very broad as it can be used in humanitarian/homeland defense to guard against spreading of pathogens such as Ebola, or in hospitals to test equipment, etc., for devastating pathogens such as MRSA before spreading, or in any food processing facility to perform frequent checks on produce/meats to prevent recalls for pathogens such as E.Coli which are PR disasters for these companies.
This company is development stage, but has very serious potential upside as it trades slightly under $0.03 at an overall market value of roughly $7.5 million. Once commercialized, even if the Firefly Dx garnered a small amount of market penetration, we feel the Company could be worth 10 - 100X what it's trading at now, based on industry price to sales multiples.
Another company making serious moves in the medical device market is LeMaitre Vascular, Inc. (NASDAQ: LMAT). LMAT is a provider of devices and implants for the treatment of peripheral vascular disease, a condition that affects more than 20 million people worldwide. The Company develops, manufactures and markets disposable and implantable vascular devices to address the needs of its core customer, the vascular surgeon. LMAT makes implantable products for heart surgery, a huge and growing market as evidenced by their 58% year over year revenue growth, which is why analysts like Investors Business Daily and Zacks Investment Research have it as one of their top picks. LMAT's stock chart has been on fire of late, with its price climbing to $14 from only $7 at the beginning of the year. Smart traders may want to wait for this name to come back to the $11 range before seeking a position in the security.
The last name we researched as a strong name in the medical device space is Sharps Compliance Corp (NASDAW: SMED). Headquartered in Houston, Texas, SMED is a leading full-service national provider of comprehensive waste management services including medical, pharmaceutical and hazardous. Its key markets include pharmaceutical manufacturers, home healthcare providers, assisted living / long-term care, retail pharmacies and clinics. The Company's flagship product, the Sharps Recovery System, is a comprehensive solution for the containment, transportation, treatment and tracking of medical waste and used healthcare materials. The Company also offers its route-based pick-up service in Pennsylvania, Maryland, Ohio and Texas. The stock has been on a tear lately mostly due to analysts continually raising their earnings estimates and an overall positive outlook party created by the company's acquisition of Alpha Bio/Med and Management's indication that they are keen on making further acquisitions.
The Wealthy Biotech Trader is always researching new trade ideas which have the makings for large market moves. Traders are urged to follow our parent outlet, The Wealthy Venture Capitalist on social media (see below) to stay apprised. We are an anti-email media outlet, and as such will only be releasing our reports/ updates/ news through Twitter and Facebook as well as newswire.
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