Align Technology, Inc. (NASDAQ:ALGN) stock has been on quite a run this year. It’s up over 100% year to date.
The company, which makes Invisalign clear plastic orthodontic products as well as proprietary equipment to fit and analyze the placement of the systems, continues to dominate this sector.
While ALGN stock has been a darling of Wall Street for a while now, that affection has grown stronger in recent weeks as Washington has moved from healthcare to tax reform.
The feeling now is, that if Congress can pass tax reform that cuts taxes for the middle class, some of the money that goes back to taxpayers may end up in people’s mouths.
Analysts on the Street contend that many people that get some extra spending money tend to spend it on cosmetic services, like straightening their teeth. Since Invisalign isn’t covered by insurance, customers have to pay out of pocket, so extra spending money would certainly be an inducement.
That’s not to say that Align Technology hasn’t earned its results. ALGN stock has been very successful as the company rolled out newer versions of its Invisalign technology to appeal to a much broader market.
Doctors like the technology because it’s much easier to work with than metal brackets and wires, which means they can spend less time per patient. That means they can see more patients.
According to Business Insider, ALGN controls about 90% of the high-end clear plastic braces market, where patients use graduated sets of aligners. It also has nearly 65% of the lower end market.
One concern has been that its proprietary computer-aided design and manufacturing equipment is coming off patent this year. But given the penetration of the Invisalign product line, it’s unlikely it will matter much.
ALGN stock is certainly a momentum story, as Wall Street hedge funds and exchange-traded funds are still scrambling into the stock.
Another feather in ALGN’s cap is its announcement earlier this year that it opened its first Invisalign treatment planning and training center in Chengdu, China. While it has been selling Invisalign in China since 2011, it will now be integrated into the Chinese economy.
This is an important step for Western companies. Selling into China is not as advantageous as selling there domestically. When you’re on the ground, you’re employing and training Chinese workers and that is looked upon much more favorably by consumers and governments alike.
And initial estimates for orthodontic treatments in China are expected to be around 3 million people per year. That is a serious growth engine that even Street analysts aren’t talking about yet.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.