Everyone is selling, the charts are red, but should you panic? Not at all. As a long term investor, my favorite time of the economic cycle is when great stocks sell at an unjustified discount. Today I want to bring to light the market’s darling – Genscript Biotech Corporation. Looking at its size, financial health and track record, I believe there’s an opportunity with Genscript Biotech during these volatile times. View our latest analysis for Genscript Biotech
Genscript Biotech Corporation, an investment holding company, engages in the manufacture and sale of life sciences research products and services. Founded in 2002, and run by CEO Zhang Fangliang, the company employs 1,600 people and with the company’s market cap sitting at HK$43.04B, it falls under the large-cap category. Size matters. The bigger the company is, the more well-resourced it is. The more money it produces from its operations which means it is less reliant on external funding. When times are bad in the market, being self-sufficient is extremely important as you can continue to operate at your own pace. Therefore, large cap companies are a great bet to invest in when you’re heading to the bottom of the cycle.
Having high levels of debt can put pressure on companies during downturns since they have to continuously service their debt payments and interest costs. This means they need to maintain enough cash-on-hand for these expenses as well as maintain a cash cushion for unforeseen circumstances, which can get costly. In Genscript Biotech’s case, they have no debt on the books, which eliminates short-term debt pressures highly-levered companies may face. Its current cash position of US$131.93M is enough to meet near-term liabilities, placing it in a financially robust standpoint in the face of uncertainty.
1548’s annual earnings growth rate has been positive over the last five years, with an average rate of 34.92%, outpacing the industry growth rate of 15.64%. It has also returned an ROE of 13.95% recently, above the industry return of 10.95%. Characteristics I value in a long term investment are proven in Genscript Biotech, and I can continue to sleep easy at night with the stock as part of my portfolio.
Next Steps:
Whether you’re convinced or not, the key takeaway here is that every stock gets hit in a bear market, but not every stock deserves the blow. When prices are dropping like flies, now is the time to do your research and buy at a discount. Genscript Biotech tick the boxes in terms of its scale, financial health and proven track record, but there are a few other things I have yet to consider. Below I’ve compiled a list of factors for you to continue your reading before you buy:- Future Outlook: What are well-informed industry analysts predicting for 1548’s future growth? Take a look at our free research report of analyst consensus for 1548’s outlook.
- Valuation: What is 1548 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 1548 is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.