It is getting harder to find bargains in a market that exists in a world of falling overall global growth as well as concerns around Europe and the "fiscal cliff". Finding stocks at a reasonable price that should grow regardless of these concerns should be a primary focus for growth investors. One cash rich, underfollowed biopharma stock that should do well regardless of what the coming months bring is Anika Therapeutics (ANIK).
"Anika Therapeutics develops, manufactures, and commercializes therapeutic products for tissue protection, healing, and repair. Its products are based on hyaluronic acid, a naturally occurring biocompatible polymer found in the body." (Business description from Yahoo Finance)
Seven reasons ANIK is a solid growth play at $14 a share:
- The first thing one notices about this stock is its consistent revenue growth. It has grown sales at better than an 18% annual clip over the last five years. Analysts have it growing revenues between 13% to 15% in both FY2012 and FY2013.
- Due to increasing sales and improving margins, EPS is accelerating in the first two quarters of this year. The company made 14 cents a share in 1Q2012 versus 2 cents in 1Q2011 and 26 cents a share in 2Q2012 versus 17 cents a share in 2Q2011.
- Anika more than tripled its operating cash flow from FY2009 to FY2011 and has a solid balance sheet with over $25mm in net cash on its balance sheet (Around 15% of market capitalization)
- The stock is selling in the bottom third of its five year valuation range based on P/S, P/E and P/B.
- The stock is not covered by many analysts but the two analysts that do have price targets are at $18.50 and $21 on ANIK.
- Most of the company's sales are domestic. It has lots of opportunities to grow revenues internationally including Asia where it is just establishing a presence.
- Growth prospects for Anika seem underpriced given the stock has a five year projected PEG of under 1 (.59). Consensus earnings estimates for FY2012 and FY2013 have also ticked up over the past month.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in ANIK over the next 72 hours.
