Medpace Holdings, Inc. is a financially healthy and robust stock with a proven track record of outperformance. We all know Medpace Holdings, and having this large-cap to cushion your portfolio during a volatile period in the stock market isn’t a bad idea. Today I will give a high-level overview of the stock, and why I believe it’s still attractive.
Medpace Holdings, Inc., a clinical contract research organization, provides scientifically-driven outsourced clinical development services to the biotechnology, pharmaceutical, and medical device industries worldwide. Started in 1992, and led by CEO August Troendle, the company currently employs 3.20k people and with the company’s market cap sitting at US$2.9b, it falls under the mid-cap group. 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.
With zero debt on its balance sheet, Medpace Holdings isn’t constrained to debt obligations and covenants, which can be burdensome during financial downturns. Highly-levered companies have to maintain a cash cushion to meet near-term interest payments as well as meet unforeseen circumstances. With no lenders’ needs to tend to, Medpace Holdings enjoys financial flexibility and independence – an invaluable position to be in during bear markets. Its cash and short-term investment is also sufficient to cover other upcoming liabilities, which means MEDP is financially robust in the face of a volatile market.
MEDP’s annual earnings growth rate has been positive over the last five years, with an average rate of 72%, outperfoming the industry growth rate of 13%. It has also returned an ROE of 13% recently, above the industry return of 13%. This consistent market outperformance illustrates a robust track record of delivering strong returns over a number of years, increasing my conviction in Medpace Holdings as an investment over the long run.
Next Steps:Based on these three factors, MEDP makes for a strong long-term investment in the face of a fickle stock market. If you’re a risk averse investor, lining your portfolio with proven companies you’re willing to buy more and more of as the price falls, is a good strategy to build your wealth over the long run. This is the beginning of your research, but before you decide to buy MEDP, I highly urge you to understand more about the company, in particular, in these following areas:
- Future Outlook: What are well-informed industry analysts predicting for MEDP’s future growth? Take a look at our free research report of analyst consensus for MEDP’s outlook.
- Valuation: What is MEDP 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 MEDP 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.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.