I doubt Avantor will ever become a household name… and that’s fine. It focuses on selling lab equipment and consumables — a market that regular folks don’t pay much attention to.
Avantor develops and sells thousands of different products used for scientific research, drug development, and testing. Its customers mainly come from the healthcare/biopharma space.
Avantor might be a niche business, but it’s surprisingly large. Its market cap is above $20 billion — putting it well above small-cap territory. More importantly, its results are outstanding. Sales are up more than 4x since 2017, growing from $1.2 billion to just under $6.4 billion in 2020.
Even better, the company just turned profitable a couple of years ago. As a result, its earnings growth numbers look phenomenal. For its latest quarterly results (Q1), Avantor posted a 13.5% increase in revenue vs. Q1 2020. Earnings per share (EPS) more than doubled vs. a year ago, rising 101%. That’s the kind of growth we want to see!
Guidance is one of the most critical factors to watch for growth companies. In this case, it’s another bullish sign. Avantor raised its guidance during its Q1 report, saying it expects revenue growth in the 6–9% range for 2021, along with earnings growth of around 40%. Again, these are solid growth numbers that are headed in the right direction.
Of course, the most important factor is whether big institutional investors love the stock. And this might be Avantor’s most impressive characteristic. Since May 2020, Avantor has 27 Big Money buy signals… and zero sell signals. That’s an amazingly steady flow of money into the stock.
This stock was below $20 a year ago… Now, it’s around $35. And Big Money has been buying consistently the whole way up. That’s a sign that there’s plenty of upside ahead, especially when you consider this is a little-known company tied to the massive healthcare/pharma industry.
In short, Avantor checks all the boxes for us. It has great fundamentals, a chart that’s going up, and huge support from Big Money buyers. As a bonus, Avantor gives us some healthcare sector exposure, making it a great addition to the portfolio.