Hello (investing) world! This is my first time posting what I will call a "micro" due diligence on a company, been investing a little over 4 years. My intent is not to push the excitement train / pumping like many recent momentum stocks, but to see whether I have a blind spot in what could be a long-term hold for me.
Just for a tad of context, I had recently begun DCA'ing into Newegg (NEGG) in early to mid June, shortly before my position leaped some 76% in one day. Me, being one the more conservative side and a bit of a doofus, cashed out entirely from my position. The stock then ran something like another 250% the next 2 days. While SI was high (~25%), the more exciting part of the company was it was being valued around 2-2.5bn when I was buying (for a company raking in over 1bn per year in revenue). That discount was what really compelled me to buy in. Could've held longer but still great return, can't complain.
Okay, so the company I'm DCA'ing into now and feel more bullish about is GoodRx (GDRX). This is just a few days of research, so just scraping the surface of where the company stands. Same type of story as NEGG, ~25% SI, but perhaps more important than that is that it is valued at 11.5bn with a service that has saved consumers more than 30bn in prescription drug costs. There was a big sell off from what, on the surface (price action), looks like really poor 2020 performance. But my hunch is that most all of this can be explained by COVID and the extreme drop in the number of people going to their regular doctors' appointments, scheduled surgeries being cancelled, etc. Even then, revenues were $550mil in 2020. The company reportedly has the third most popular health app on the app stores, and was also apparently quite helpful for those looking for their vaccines. One portion of the company is delivering tele-health services, which I would argue is largely becoming the new normal even as things open back up. To top it off, the company has 4 consecutive quarters of positive earnings, more cash than long-term debt on the balance sheet, and is trading only 6% above its all-time low. If it hit a short squeeze, this could also be a long-term hold investment because the fundamentals of the business is growth/expansion and lower bankruptcy risk. Plus it could rally much higher on next quarter(s) earnings because the re-opening could allow them to massively beat last year's revenue numbers (pent-up healthcare demand from delayed care from COVID lockdowns).
Am I missing something? Any bearish indicators you all can find that would suggest this company is tanking and does not have a sustainable business model?
TLDR: Bullish on a Rx drug savings program with growing revenues, arguably oversold and too much pessimism. Attractive valuation and possible short squeeze with sustainable price growth.
Thank you for reading my novice DD report and appreciate your input!
Submitted July 16, 2021 at 12:03AM by getpsychosocial https://ift.tt/2UNBf03
