We want to introduce a promising new recommendation that we spotted in the biotech industry, suggests Mark Skousen in his premium advisory service, Fast Money Trader.
Our newest recommendation is a biotech stock that has very strong earnings and price movement. Those are enticing positives in the biotech industry, where companies typically require substantial investment to become profitable.
Our new recommendation is Amphastar Pharmaceuticals (AMPH), a Rancho Cucamonga, California-based biopharmaceutical company that focuses primarily on developing, manufacturing, marketing and selling technically challenging generic and proprietary injectable, inhalation and intranasal products. In addition, the company sells insulin API products.
The company's finished products are used in hospital or urgent care clinical settings. The products also are contracted and distributed through group purchasing organizations and drug wholesalers. It has two reportable segments: finished pharmaceutical products and API products. Geographically, the business presence of the firm is seen in the United States, China and France. The United States accounts for most of those revenues.
Amphastar reported on March 10 that its net revenues for the fourth quarter of 2021 reached $120.9 million, up 26% from the same quarter a year ago, with its generally accounted accounting principles (GAAP) net income jumping to $19.8 million, or 39 cents per share, from a loss of $6.3 million, in fourth-quarter 2020.
Adjusted non-GAAP net income for the fourth quarter of 2021 touched $20.8 million, or $0.42 per share, for a rise of 160.6% from $7,994 during the same quarter of 2020.
On March 10, AMPH reported its Q4 numbers, which handily beat estimates on both the revenue and earnings fronts. In fact, earnings per share (EPS) growth in the quarter was an outstanding 163% year over year. That is the kind of growth of late that’s vaulted AMPH into the top 3% in terms of EPS growth vs. the rest of the market.
On the price front, AMPH shares are up some 48% year to date, a move that we think is both impressive and not yet over. The big move over the past 52 weeks of some 90% has put AMPH into the top 1% of performers on a relative strength basis. Interestingly, Piper Sandler just raised its target on the stock to $35.00, but already AMPH has come right up to that point.
Given the specialization and niche market (its most well-known drug is Primatene Mist for asthma sufferers), and its delivery method (inhalation), we think more growth of the kind we’ve seen of late is on tap. So, let’s "inhale" this stock into our portfolio right now. Buy with a protective stop set at $27.60.