I’ve been pretty bullish on Zomedica (NYSEAMERICAN:ZOM), even as ZOM stock’s price began a slow tumble over the last month.
The veterinary diagnostic company is on the verge of its first major product launch. Earlier this year, the stock price jumped more than 200%. Now, the stock is up over 700% year-to-date (YTD), but it has since fallen from its 52-week high and could be considered a slight bargain today.
Still priced at less than $2 per share, ZOM stock has the potential to deliver massive growth. It all comes down to the nation’s passion for its pets.
ZOM Stock: Vet Diagnostics at a Glance
Zomedica is a veterinary testing and pharmaceutical company with a much-anticipated product: Truforma.
Truforma is a diagnostic platform that can identify thyroid and adrenal issues in dogs and cats. Instead of shipping a blood test to a third-party lab, veterinarians and technicians can use the product to run the tests themselves.
That makes the diagnostic process quicker and cheaper — two factors that will definitely appeal to worried pet owners.
The device is also coming at the perfect time, with our lives changed drastically by Covid-19. The number of pet adoptions has skyrocketed during the pandemic, with people suddenly working or attending school from home. Without the ability to socialize, many people saw getting a new pet as a great solution to their companionship problem.
It’s amazing how Fido and Fluffy can make their ways into your heart. Devoted pet owners will do just about anything to keep their pets healthy and happy. And since a pet with abdominal distress can’t tell their owner exactly what’s wrong, a quick, accurate diagnostic tool is becoming all the more important.
According to Grand View Research, the market for pet diagnostic testing was about $2.1 billion in 2018. Analysts project that amount to grow by 8.4% per year through 2026. And on top of that, in 2019, Americans spent as much as $29.3 billion on veterinarian bills.
ZOM at a Glance
Since Truforma is Zomedica’s first product, it stands to reason that the company isn’t turning a profit. It reported no revenues for 2020. But even so, its recent earnings report showed signs of promise.
Zomedica’s earnings report revealed that it lost $16.9 million in 2020, or 5 cents per share. That is an improvement from 2019, when the company lost $19.8 million, or 19 cents per share.
Additionally, the company spent $8 million on R&D, compared to $10.3 million in 2019. It also cut general and administrative salaries from $7 million to $6 million. Zomedica ended the year with $76.7 million in cash. The company only had $14.9 million in cash in 2019, so that’s a markedly improved position.
ZOM stock was trading at just 35 cents at the beginning of the year, but shot up in January as word began circulating about Zomedica’s deal to market and sell its Truforma devices across the southern and eastern United States.
And thanks to the power of a viral video, ZOM stock got another boost in February when someone paid a documentary star to tout the company on a celebrity-cameo video-messaging platform. The stock jumped well over 200%.
The Bottom Line
Zomedica slipped last month after the company took advantage of the run-up in its stock price to issue more shares. That brought in more than $170 million in cash, so perhaps it was worth it to the company.
Despite the recent dip, though, ZOM stock is a name that’s worth watching. For one, its Truforma product has a lot of potential. Plus, Zomedica’s partnership to commercialize Truforma makes it more than likely that it will show revenues this year.
If ZOM stock can shows profits this year, shares will go even higher than a cameo can push them. That makes Zomedica an interesting bet, as Truforma goes on sale at the end of the month.
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On the date of publication, Louis Navellier did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the InvestorPlace Research Staff member primarily responsible for this article recently initiated a long position in ZOM. The InvestorPlace Research Staff member did not hold (either directly or indirectly) any other positions in the securities mentioned in this article.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system —with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation.