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Insulet: Dollars and Diabetes

10/07/2016 8:00 am EST


Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

Headquartered near Boston -- the biotech center of the country -- this medical device company has been in operation since 2000 and is now achieving great success with its revolutionary, easy-to-use continuous insulin delivery device, states Mark Skousen, editor of Fast Money Alert.

Not many stocks do well in September and October, but one that looks promising is Insulet (PODD), the developer and maker of insulin infusion systems for people with diabetes; it is called the OmniPod System.

It also sells blood glucose testing supplies, insulin pumps, pump supplies, pharmaceuticals and other products for the management and treatment of diabetes. 

Diabetes is growing rapidly in the United States as the aging population is facing the fact that they overdosed on sugar and poor diets for years.

Type 2 diabetes is an epidemic that is affecting an ever-increasing proportion of the US population. Since 1980, the number of Americans suffering from Type 2 diabetes has increased four-fold to more than 22 million. 

Demand for simpler ways to inject insulin is increasing. PODD revenues jumped 44% to $384 million in the most recent quarter, and gross profits rose to $148 million.

The company is still losing money, but it has cut its losses dramatically in the past three years and could be profitable at the end of this year. 

PODD handily beat estimates in the past two quarters, and could do so again when it reports in early November. In anticipation that this trend will continue, insiders have been buying the company’s stock. 

PODD recently issued $250 million in senior notes that are due in 2021, so it won’t need to raise more money anytime soon. Right now, it has $111 million in cash, with only $178 million in debt. Let’s buy Insulet at market and set a protective stop of $34 a share.

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