Able: Oberweis' Generic Favorite
01/10/2003 12:00 am EST
The father and son duo of Jim Oberweis, Jr., and Sr. use a proprietary system based on eight criteria, to identify rapidly growing companies that are increasing revenues and earnings by at least 30% a year. Generally, they only invest in a stock if its p/e is less than one-half of its growth rate. Their 2003 top pick is Able Labs, a small generic drug maker.
"Our single favorite investment opportunity for 2003 is a small generic drug maker by the name of Able Laboratories (ABRX NASDAQ). With drug prices escalating at about twice the rate of inflation and an aging population that continues to struggle with these rising costs, the demand for a cheaper alternative to prescription drugs has never been greater. Given the additional near-term opportunity from branded drug patent expirations, which opens the door to generic equivalents at a fraction of the cost, and the likelihood of favorable legislation for the generic drug industry, there’s an incredible opportunity that Able Labs is not passing up.
"The company’s niche is going after the markets that fall just under the radar of the big guys. Specifically, it looks at products with under $100 million in revenues. With limited competition and a growing number of opportunities, it’s no wonder the company reported a nearly 200% rise in sales in its most recent quarter. This growth is expected to continue at a rapid pace as Able possesses a sizable and growing pipeline of products, with approximately 12 Abbreviated New Drug Applications pending FDA approval.
"We are still at the very early stages of an explosive growth story; the company has virtually no analyst coverage as of yet and only has the last three quarters of profitability under its belt. In addition, the company reached another milestone last November when its stock moved from the Bulletin Board and began trading on the Nasdaq SmallCap Market. Able Labs is doing all the right things in a market with huge potential. This rapidly growing small-cap will not go unnoticed for much longer."