Dealmaker’s Diary: This Biotech Is Fighting a Silent Killer

Alpesh Patel|June 20, 2024

Chronic and life-threatening diseases are on the rise…

But one company stands tall in the fight against a silent killer: pulmonary arterial hypertension.

It’s a $12 billion biotech with a track record of impressive run-ups.

And when I put it through my proprietary Value-Growth-Income algorithm… the results are stunning.

A score of 9 out of 10. A forecast P/E ratio of just 11.5. And a cash return on capital invested of 12%.

In a sector known for volatility, this stock is a rare beacon of stability.

Plus… it has a potential upside of 60% based on its discount cash flow valuation.

Don’t miss out on the potential of this biotech gem.

Get all the details on the company – including the ticker – in my latest video.

Click on the image below to check it out.

TRANSCRIPT

It’s Stock of the Week time. Now, from where I am, it’s Father’s Day, so you might hear my son in the background. He’s done some wonderful diagrams there and left half the cupboards open.

The grand reveal… United Therapeutics (UTHR).

So what is it about the company? Why is it in the Dealmaker’s Diary?

Well, it’s had some good run-ups. It’s a biotech company that engages in the development and commercialization of unique products to address unmet medical needs… particularly those that are chronic and life-threatening. We’re talking about cardiovascular diseases, an in particular, pulmonary arterial hypertension.

Guess what? The number of folks affected by those diseases is only going to go up… and therefore the stock price.

The market cap is a whopping $12 billion. And you likely know the healthcare sector has been on a bit of a rip this year.

Now I’ll tell you what I like about the company. Let’s hit the numbers.

Value-growth-income, my proprietary algorithm to measure companies for being undervalued and having good income, good sales growth, and good profitability growth, this is a 9. Anything 7, 8, 9 hits the mark. The forecast P/E ratio – remember, it’s basically a technology company – is only 11.5. So you’re paying $11.50 for every future dollar of profits.

Cash return on capital invested is 12%. Not bad, certainly for a company that has to spend a lot on investment.

Why is that important? Click here to see how Goldman Sachs discovered that CROCI is so critically important.

Again… cash return on capital invested, 12%. Fantastic.

The Sortino is not bad. That’s the average return versus the downside risk of missing it. I want it to be above 0.3. That’s not bad.

Not a very volatile stock, which is good. It outperforms the market.

You can see the trend direction. You can see the price direction. You can see, on an upward trend, the worst-case drawdown is about 16% over a two-month period. That’s a drawdown that I think most people could stomach.

So it’s on the way up. I like it. I like the direction. I like what’s happening with it. I love it all.

It’s 60% undervalued on a discount cash flow basis.

It’s Father’s Day. So I’m going to go with my son. I managed to get that done just in time for you, but you didn’t miss anything.

Overall, it’s a solid company.

You can see that the analysts like it as well. Happy Father’s Day to all of you, whichever part of the world you’re celebrating in.