Align Technology, Inc. (NASDAQ:ALGN) stock is up 164% year to date and up almost 875% in the past 5 years.
That kind of performance usually comes from a biotech that has found a cure for a rare disease or a cloud computing company that has just landed a couple gigantic clients. That would be something we could grasp.
But a company that sells orthodontic aligners? 21st century braces?
Well, it’s true. ALGN stock has been going gangbusters for more than 5 years at this point. But that leads to the next question: when do the good times end?
ALG Stock By the Numbers
Align Technology is now sporting a $20 billion market cap and a current price-to-earnings ratio 87. Is all the good news baked in? Does ALGN stock have any upside left?
Certainly, those questions have been asked quite a lot since its rise began. And the answer has been “Yes” for the past half-decade, especially the past couple years.
What’s important to remember here is that the technology that ALGN started with has not only continued to improve, but now that it’s so much more popular, that the pricing has gone down while the margins continue to go up.
This is as much a story about the transitioning of the orthodontic industry as it is about plastic aligners and computer equipment that supports this new generation of braces.
That is why ALGN has been so strategic in not getting bogged down in the “old” word “braces” and has adopted a new branding for itself and its products, “aligners.”
Also, as the popularity and accessibility of ALGN products grows, so do its markets. It used to be that Americans were the only major country that really obsessed about their teeth.
But that symbol of affluence is now taking hold in Europe as well as Asia. It’s not just about dental hygiene, it’s also about a straight set of choppers.
ALGN has been very smart about its growth. It has operations in China that are expanding, as well as other countries beyond U.S. borders. And because it has built its brand so extensively, it will remain a major player even as its patented technologies expire.
Align and Millennials
One of the best examples is ALGN’s strategic partnership with Smile Direct Club. This company has taken orthodontics out of the office and onto your laptop. It’s marketing aligners for Millennials with a hip campaign that has spread across social and traditional media.
You join online and get your devices shipped to your house. Almost everything can be done online. And that means, it’s a lot cheaper since they’re cutting out the doctor’s share of the pricing.
Of course this isn’t recommended for everyone, but it’s a huge potential opportunity for ALGN to keep its products on the growth path for years to come.
So, is there any upside left in Align? Absolutely.
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.