There aren’t many stocks that have gone up in 2022.

But our latest Stock of the Week has… after nearly doubling last year.

It’s a biotechnology company that’s addressing the huge and growing need to treat chronic diseases as our population ages.

It’s seen some big gains over the past few years…

But even better… it has an impressive 34% CROCI (cash return on capital invested).

Find out which stock hits the mark for my Growth-Value-Income system this week…

It’s all in the latest episode of Stock of the Week.

Click on the image below to watch it.

Transcript

Hi, everyone. Well, guess who’s back… Yes, it’s me, and you see me in my room, and my son’s had a go at the room as much as the markets have had a bit of a bashing as well.

But let me tell you my Stock of the Week for this week, and it’s back to one of the ones that I’ve researched. As you know, with my GVI Investor research letter, you get in-depth analysis from what I look at, what my team’s looking at, what we find from hedge funds, what we find from financials and accounts… And what I wanted to share with you was one of the ones which have hit a lot of my numbers.

I look at valuation, revenue growth, dividend yields… look at cash flow… We look at balance sheet. We look at the P&L statements. We look at holdings. We look at news flow. We look at a whole bunch of things, like price action… pretty much every single thing you can imagine.

If it was a car, we’d be taking it apart and putting it back together again, okay? It’s a bit like that.

Today, what I want to talk about for Stock of the Week is a company called Catalyst Pharmaceuticals (CPRX).

Now, as you know, I’m Alpesh Patel. I run a hedge fund. I also have a private equity fund, and on the private equity side, we have invested in med tech – medical technology companies – so this is an area which I’ve got some familiarity with.

Catalyst Pharmaceuticals is a listed company. It’s been around since 2002, and they’re really focused on debilitating and chronic diseases, okay? So they’re in an area where we’re seeing as a general issue, there’s a need. It’s a human need, and that need isn’t going to diminish. If anything, as population growth increases, it’s going to continue being more of an issue. And as the rest of the world gets wealthier, it’s going to be something which more people are going to be able to afford, all right?

So what was it about this company which attracted me? Remember, we’ve got all of these various criteria we look at… valuation, revenue growth, cash flow… all of those factors I mentioned. And with this company, whilst it’s volatile – and you’ll be able to see it’s volatile – 2017… 246% up. But in 2018… down 50%. Then, in 2019… doubled. In 2020… pretty flat. 2021… doubled again. And so far in 2022 – and this is what’s interesting – it’s up. Not much is up in 2022. This one’s up, okay?

And that in itself is not enough, obviously, just because a stock price is up.

Cash flow, or cash return on capital invested… and you’ll know if you’re already part of my GVI Investorresearch service that this is really important to me, the cash return on capital invested, because it’s a factor used by the wealthiest clients of Goldman Sachs. They know that the data is, the companies in the top quartile by CROCI – cash return on capital invested – generate a return of about 30% per annum on average over the long term, and this is a classic example of that.

Well, CROCI here is 34.6%. That’s a pretty impressive number. And of course, they’re up over the last six months. They’re up so far this year. They were up last year. The Sortino ratio – measure of reward, the returns you’re getting for the volatility – not bad. It’s above a half, which is sort of my threshold, outperforming the market. Like I said… negative, it’s a bit volatile. When I dive deeper into some of those numbers – turnover going up, cash flow good, profitability good – all of these aspects I’m liking. Pre-tax profits… good. Return on equity, return on capital, employed free cash flow conversion… a lot of good things that are attracting me to the company.

Anyway, that’s my Stock of the Week. Hope you like it. Gives you a little tip-of-the-iceberg taste of what we go into more detail when we’re doing the GVI Investor research reports.

Well, I’ve been Alpesh Patel. Hope you enjoyed this. Thank you very much, and I look forward to speaking to you more in the coming weeks.