Many investors have a gross misconception about value investing, according to which it only applies to buying stocks of companies trading below their net asset value, or at a ridiculously low multiple. benefits. But the real success of this method lies in the acquisition of stakes in companies capable of unlocking their true intrinsic value.
Figuratively speaking, some well-run businesses are virtually licensed to print more and more money year after year. Yet the corresponding growth in cash flow, at various times, is not reflected in their stock price. But eventually the market grabs the hint and wakes up to these companies.
In fact, three of those value stocks in this category returned between 21% and 2,930% in the last three months alone: Ocugen (NASDAQ: OCGN), Share capital Hedosophia Holdings V (NYSE: IPOE), and Nano-Dimension (NASDAQ: NNDM). It is much better than the S&P 500‘s meager return of 6% over the same period. How much value is stored in these companies?
Ocugen is a biotech that develops gene therapies with the ultimate goal of curing blindness. Its therapeutics have yet to enter Phase 1 clinical trials. Although it is in its infancy in achieving a seemingly impossible feat, the company has already amassed a massive market cap of $ 1.77 billion. Which give?
It turns out that Ocugen is ready to seize a billion dollar opportunity through the distribution of a coronavirus vaccine. Its partner Bharat Biotech has developed an 81% effective coronavirus vaccine (COVAXIN) which has passed through India’s regulatory path. Bharat Biotech and Ocugen are now seeking emergency use authorization for its vaccine from the United States Food and Drug Administration.
The two companies plan to sell 100 million doses of COVAXIN in the United States starting in the second quarter of 2021. If successful, Ocugen would receive up to 45% of the company’s profits, which would likely amount to 1 billion dollars given the current pricing environment for them.
In addition, the biotech could then reinvest its profits in the development of its gene therapies, skipping the alternative of diluting the assets of existing investors for more capital. It’s a fantastic decision on Ocugen’s part to fund his own research. I would definitely recommend avid biotechnology investors add it to their portfolios.
2. Share capital Hedosophia Holdings V
Currently, the only way to buy personal finance company SoFi is to buy shares of its acquirer Social Capital Hedosophia Holdings. The transaction is expected to close in April.
SoFi is one of the fastest growing companies in the financial industry. It sets itself apart from its competition by offering an all-in-one platform for home loans, student loans, personal loans, investments, credit cards, and more. Customers can access a wide selection of financial products through its namesake SoFi app.
This year, SoFi plans to grow its revenue by 60% year on year to $ 1 billion and break even in terms of operating income minus non-cash expenses (EBITDA). By 2025, Sofi expects its revenue and EBITDA to grow to $ 3.7 billion and $ 1.2 billion, respectively.
It currently has over 1.72 million members, with 775,000 customers subscribing to more than one product. Trading at just 14 times the profits of 2025, this is a fast growing gem in the financial sector not to be missed.
With a market cap of $ 2.4 billion but an annual turnover of only $ 3.4 million in 2020, many investors are probably wondering how on Earth Nano-Dimension comes close to being a value stock. . The answer lies in its intangible assets.
You see, the company invented its signature device, called DragonFly LDM, for manufacturing 3D printed electronics such as molded sensors, conductors, antennas, and connected devices. Each machine costs between $ 100,000 and $ 250,000.
Do not fear the price, as there are many cost savings associated with such a device. For starters, developers can automate the DragonFly LDM to run 24/7. Its ability to fabricate complex geometries saves designers time and effort as they can easily print prototypes early on and correct errors. Finally, since this is a 3D printer, the actual time to make and assemble the individual components is almost completely gone.
The company temporarily hit sales as the COVID-19 pandemic forced many manufacturers to cut capital spending. By 2025, however, the global 3D printing market is likely to recover and reach $ 2.4 billion. Nano-Dimension has more than enough cash ($ 670.9 million) to support its operating loss of $ 35.7 million per year, so I would expect it to do a full recovery and robust. If you are passionate about industrial actions, Nano-Dimension is a big bet.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.