Wednesday September 21, 2011
by Ian Wyatt, editor Small Cap Investor
Align Technology (ALGN) -- which makes 'Invisalign' braces -- is in the sweet spot of healthcare industry growth and opportunity.
According to the American Association of Orthodontists almost 80 percent of all American teenagers and 1 million adults wear braces at any given time.
In the past, correcting teeth required wearing metal braces and rubber bands. Braces were uncomfortable and embarrassing. They were decidedly not cool.
Align's main product, Invisalign, caters to the teen and adult markets alike. And its broad market has resulted in stable revenue growth over the years.
In fact, Align has managed to grow sales every year since 2006 and even managed a 3 percent growth rate during the worst of the Great Recession.
Total revenue rose an impressive 16.4 percent to $104.9 million in the first quarter thanks to an increasing patient population.
But the numbers of new patients this year should pale in comparison when Align brings Invisalign to mainland China.
Over the past decade, the Chinese orthodontic market has grown steadily as the importance of dental health and personal appearance has increased among the general population of 1.4 billion.
Today, China is estimated to have nearly half a million new orthodontic case starts each year, with a higher percentage of complex class II and III malocclusion cases than in Western countries.
Additionally, the healthcare sector, which has underperformed against the market over the past two years, appears ready to regain lost ground.
The shares are a fantastic buy below $20 and I expect them to rise to $30 over the next year. Investors looking for an easy way to straighten their portfolio need look no further than Align.
Learn more about this financial newsletter at Ian Wyatt's Small Cap Investor.