Stock (Symbol) |
Align Technology (ALGN) |
Stock Price |
$142 |
Sector |
| Healthcare |
Data is as of |
| May 4, 2017 |
Expected to Report |
| Jul 27 |
Company Description |
 Align Technology, Inc. designs, manufactures and markets a system of clear aligner therapy, intra-oral scanners and computer-aided design/computer-aided manufacturing (CAD/CAM) digital services used in dentistry, orthodontics and dental records storage. Source: Thomson Financial |
Sharek’s Take |
 Align Technology is the company that designs and manufactures Invisalign clear braces and iTero scanners, which dentists use to scan teeth for a fitting. ALGN stock has doubled in the last year and is one of the hottest in the market. The stock popped after the company reported as profits surged 70% and blew past the 34% estimate. The stock jumped from $118 to $135 on the news and is now in the $140s. Sales rose 30% last qtr as Invisalign volume increased 28%, including 20% in North America and 41% Internationally. 49,000 teenagers started treatment with Invisalign, and that was up 32% year-over-year. Sales to Dental Service Organizations (DSOs) were up 50% year-over-year. DSOs are corporations such as Aspen Dental, Heartland Dental and Great Expressions that buy the equipment and pay salaries to hygenists and assistants. DSOs automate processes and adopt new technology rapidly. Last qtr ALGN launched a lighter version of its braces, called Invisalign Light, which includes up to 14 stage aligners vs 40 or more sets in Invisalign when teeth are more crooked. This could prove to be a future catalyst for a company that doesn’t seem to need it. This stock is one of the best in the market, and it’s priced that way with a P/E of 44. Still, the results are so strong that this rich stock is worth it. But right now ALGN is extended on the chart after more than a 50% rise this year and needs to settle down before I invest. The stock is on my radar. |
One Year Chart |
 Fantastic profit growth in three of the last 4 qtrs. 2QtrsAgo was actually a good qtr, but the profit figure is low because ALGN had great results in the year-ago period. The Est. LTG of 23% is solid, and may prove to be a low estimate as profits are flying higher. Estimates are for 18%, 22%, 30% and 39% profit growth the next 4 qtrs. This stock is extended after the recent run — especially after the last month’s jump — and either ALGN needs to correct or base for a bit before I will invest. |
Fair Value |
 I’ve loosely followed the stock for a long time, and didn’t invest because I feared competition. ALGN does have patents in place, but will that eliminate all competition? Still, the company is clicking on all cylinders so we should focus on the numbers. This stock sold for 31 to 34 times earnings the past three years, and now the P/E is 44. I’m putting my Fair Value at a P/E of 45. |
Bottom Line |
 Align Technologies is one of the best stocks in the market — and the numbers prove the move higher in the stock is deserved. But this run higher is parabolic, and stocks that crash often look like this before they top. I don’t think Align will crash, but if the stock market corrects 10% this stock could come down 20% due to profit taking. If that were to occur I’d be looking to buy. ALGN is on my radar, I would like to add it to the Growth Portfolio and Aggressive Growth Portfolio. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
