The healthcare sector has been crushing it for the better part of the last decade, thanks to a boon in innovation, widespread merger and acquisition activity, an aging global population that’s been driving a surge in demand for healthcare products of all kinds, and the legitimization of the medical marijuana industry in numerous geographies across the globe. Best of all, Wall Street and industry insiders alike expect this powerful growth trend to remain vibrant for at least another decade — making now a great time to stash a few healthcare stocks away for the long haul.
Which healthcare stocks are the best growth vehicles? Although there are arguably several decent candidates…
the pot titan Aphria (NYSE:APHA) and the orphan-drug specialist Retrophin(NASDAQ:RTRX) are both poised for monstrous gains in the coming decade. Here’s what you need to know about these two healthcare growth stocks right now.
A rare value play in marijuana
Most marijuana stocks have been in beast mode over the last two years in response to the legalization of adult-use recreational pot in Canada and the emergence of more friendly laws toward the use of marijuana for medical purposes in literally dozens of countries. This so-called “green rush,” however, has caused valuations across the industry to reach unsavory levels.
There is one exception to this general rule of thumb: the Ontario-based pot titan Aphria. Unlike most Canadian cannabis stocks, Aphria’s shares have essentially traded sideways over the last 12 months. The net result is that Aphria’s stock is only trading at 3.2 times its projected 2020 sales. To put this valuation estimate into the proper context, the average forward-looking price-to-sales ratio among the top players in the industry presently stands at around 16. Aphria is therefore a bargain by comparison.
The catch, though, is that Aphria’s shares have lagged behind the top dogs for a number of very good reasons. First off, some of the company’s former brass were accused of double dealing in a report by short-sellers late last year, leading to a change in leadership. The company has also had to fight off a hostile takeover bid and start the long process of rebuilding its image with the investing community.
On the plus side, Aphria still has the third-largest production capacity among Canadian growers at 255,000 kgs per year. So, if the company can get its proverbial house in order, it should eventually rebound in a big way. As a top-tier producer, after all, Aphria is well positioned to take advantage of the industry’s monstrous growth rate over the next decade.
Retrophin: Catalysts inbound
Retrophin presently markets three drugs: Chenodal, Cholbam, and Thiola. However, the company’s most important value drivers are…
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