In theory, Zomedica (NYSEAMERICAN:ZOM) has all the trappings of being, well, a trap. With a market capitalization of $885.03 million, ZOM stock resides around $1.
The bulk of that still small market value is attributable to a blistering 1,233.33% gain over the past 90 days. And, some might say the bulk of that surge is attributable to Netflix’s Tiger King star Carole Baskin recently mentioning Zomedica in a YouTube video. It was later discovered she was paid to make the kind remarks.
Add up factors such as penny stock status and kind of, sort of celebrity “endorsements” on a penny stock and the outcome could be potentially disastrous. However, ZOM stock could be different.
Zomedica is the company behind the pet diagnostics platform TruForma. So at its core, this is a pet healthcare/pet biotechnology stock we’re talking about. In the essence of prudence, investors should not get involved with ZOM stock thinking it’s the next Idexx Laboratories (NASDAQ:IDXX) or Zoetis (NYSE:ZTS). Still, there’s a runway for growth here.
ZOM Stock: Compelling Potential
Generally, I don’t like to editorialize in my articles, but please give me some latitude here as I am dog owner. My black Labrador has been with me for nine years – since she was a puppy. And while I spend a considerable amount of vacuuming (my place has white flooring), I love my dog beyond words.
I’m not the only pet owner that feels that way and data confirm that pets are increasingly viewed as parts of our families. That means pet owners want the best possible care for our furry companions. As is the case with human healthcare, animal healthcare doesn’t come cheap. Specific to the Zomedica opportunity set, the pet diagnostics market is forecast to be a multi-billion dollar arena. Moreover, it’s a growth segment and that growth is happening now.
“The global companion animal diagnostics market size was valued at USD 2.1 billion in 2018 and is expected to grow at a compound annual growth rate (CAGR) of 8.4% from 2019 to 2026,” according to Grand View Research.
Interest in TruForma
Importantly, clients are already lined up for TruForma. On Jan. 25, Zomedica announced a TruForma distribution agreement with Miller Veterinary Supply. The announcement sent the stock higher by 6.67%. The accord goes into effect on March 31.
“Protected by approximately 70 issued and pending patents, the TRUFORMA diagnostic platform uses Bulk Acoustic Wave (“BAW”) technology, developed by Qorvo to provide a non-optical and fluorescence-free detection system for use at the point-of-care,” according to a statement.
That says there’s a level of high-tech with TruForma – one that can make previously invasive diagnostic procedures less painful for pets and more accurate and efficient for veterinarians. Increased accuracy and efficiencies are the name of the game in healthcare. And that’s true whether the patient has four legs or two.
Other Vital Signs
Beyond the wide total addressable market (TAM) in pet diagnostics ZOM stock, albeit risky, is buttressed by other credible fundamentals.
The prime one being that as a result of the novel coronavirus pandemic, pet adoptions are soaring. So much so that many U.S. shelters simply don’t have enough dogs to keep up with demand.
What’s interesting about that scenario is that the Covid-19 pandemic feels like it’s been around for an eternity. But the fact is it’s a relatively new, though negative, scenario. That implies all those new pet adoptions aren’t yet being priced into Zomedica’s TAM.
Bottom line: There’s a lot of fanfare surrounding ZOM stock these days. But it may avail itself a rare example of a $1 stock that matures to the benefit of investors.
On the date of publication, Todd Shriber did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Todd Shriber has been an InvestorPlace contributor since 2014.
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