LifeCell: A Proven History of Outstanding Growth

Jun.15.07 | About: LifeCell Corp. (LIFC)

LifeCell Corporation (LIFC), one of the highest rated biotechs that I track, broke out of cup with handle base today following news of FDA approval for a new tissue graft made from pigs.

About - From Google Finance:

LifeCell Corporation develops and markets tissue-based products for use in reconstructive, orthopedic and urogynecologic surgical procedures to repair soft tissue defects. The CompanyGÇÖs products include AlloDerm, for plastic reconstructive, general surgical, burn and periodontal procedures; Cymetra, a particulate form of AlloDerm suitable for injection; GraftJacket and GraftJacket Xpress, for orthopedic applications and lower extremity wounds; AlloCraftDBM, for bone grafting procedures, and Repliform, for urogynecologic surgical procedures. The Company's tissue process technology produces a regenerative tissue matrix, a three- structure that contains proteins, growth factor binding sites and vascular channels that provide a template for the regeneration of normal human tissue. It markets AlloDerm in the United States for plastic reconstructive, general surgical and burn applications through a direct sales and marketing organization.

Fundamentals: LIFC is a company with a history of posting excellent growth. Over the past three years, the company has posted year over year earnings growth of 180%, 100% and 111%. Sales growth has been impressive as well, with consistent sales growth in the neighborhood of 50% in that time. With this kind of growth, it's no surprise that margins and ROE are well above industry averages. I'd like to see net margin a bit higher for leading companies, but 15% is quite good. ROE has been rising steadily for several years and sits at around 19%.

Technical: The stock just cleared a handle formation intraday with volume more than double the average, resulting in a successful technical breakout from a cup with handle base. It finished the day right at the high of the handle. Overall, this can be a volatile stock at times and the big, high volume drop in the left side of the base back in October is of some concern. However, initiating a small position and using a tight stop may prove to be a worthy trade. After all, this is a company with a proven history of outstanding growth.

LIFC 1-yr chart:

LIFC

Disclosure: Author has no position in Lifecell (LIFC) at time of writing.