Best Growth Stock: Align Tech. (ALGN) – 217

Please note this is only an opinion and not financial advice. Direct stock investing is subject to business and market risks. Therefore, it’s highly recommended to do proper risk management and your own due diligence before investing.

Best Growth Stock Analysis as of 25 November 2023

Top Growth Stock

NASDAQ: Align Technology, Inc. (ALGN)

• Align Technology, Inc. (NASDAQ:ALGN), a prominent player in the Health Care Supplies industry, is based in Tempe, Arizona, and boasts a workforce of 24,020 employees. 
• Align Technology, Inc. engages in the design, manufacturing, and global marketing of Invisalign clear aligners, as well as the provision of iTero intraoral scanners and associated services tailored for orthodontic professionals and general practitioner dentists.
• The company operates within the United States, Switzerland, China, and on an international scale. It operates in two segments, Clear Aligner; and Imaging Systems and CAD/CAM Services (Systems and Services).
• ALGN has garnered acclaim for its innovative product, Invisalign, providing a preferred alternative to conventional wire braces, which are frequently linked to discomfort and uneasiness, particularly during the adolescent years in middle and high school.
• The company made its initial public offering at a nominal value of one dollar in the early 2000s. By 2010, the stock had climbed to $10 before experiencing a significant surge, reaching levels in the $300s by 2018.
• Align Technology has broadened its product portfolio to encompass a diverse range of dental products and services. Notably, the company boasts a market capitalization of $16.49 billion and maintains almost a debt-free financial structure.

Shareholding Patterns:

Revenue Segments:

1. Clear Aligner Segment: Marketed under the renowned Invisalign brand, clear aligners constitute approximately 83% of the company’s revenue, yielding a robust gross profit margin of 71%.

2. Systems and Services Segment: Encompassing Imaging Systems and CAD/CAM services, this sector accounts for the remaining 17% of revenue, exhibiting a commendable gross profit margin of 62%.

What we think are PROs of business:

1. Align Technology has a history of consistent positive earnings, showcasing its operational efficiency and reliability in delivering profits.
2. The company boasts a robust financial performance, with $3.7 billion in revenue, $314 million in net income, $843 million in adjusted EBITDA, and $612 million in free cash flow over the past 12 months.
3. The company displays optimistic outlooks, driven by elevated average selling prices, expansion through subscription programs and retention solutions, and a rising demand among teenagers and children.
4. ALGN is actively investing in new technologies to fuel its future growth. The company has allocated funds towards digital tools, applications, and events focused on clinical education
5. ALGN has very low debt on its books of account which help the company to grow and reduce the interest payment burden.

What we think the RISK are:

1. High growth, while positive, presents a risk as it may pose challenges in the face of unexpected market fluctuations or difficulties sustaining such rapid expansion over the long term. Consistently maintaining rapid growth can be demanding.
2. The company’s low current ratio poses a risk factor as it suggests a relatively limited level of short-term liquidity. 
3. Company’s market cap is higher in relation of company’s current revenue generation potential.
4. The decline in Align’s stock price reflects a market adjustment to a more rational expectation regarding future earnings.

Fundamentals:

• Market Cap: 16.64 Billion
• Revenue: 3.81 Billion
• 52 Week range: 176.34 – 413.20
• EPS: 4.72
• PE: 46.04

Technical for a long-term perspective:

– Taking support at the lower rectangular support line which is the support zone from the last more than 5 years.

– Price reverses 6 times from that same support levels which indicates very strong support level for long-term.

– It may try to hit its EMA levels as a resistance zone around 290 levels which will be our first target.

– The existing level marks a point of trend reversal, indicating a strong likelihood of bullish momentum from this point onward.

– RSI is very bullish at current levels of 36 and recovering from the oversold zone and heading towards upper levels.

– Don’t miss the chance to accumulate more around lower levels of 202 -207

Entry = 217

Stop Loss = 197

Target = 290 / 385 / 500

Our Final Thought:

In evaluating Align Technology’s current position, it’s important to note the recent challenges, including a more than 50% decline from the swing peak. However, it’s crucial to consider the broader context. Align Technology, with its solid financial foundation, innovative product portfolio, and effective marketing strategies, maintains its status as a formidable and profitable player in a market poised for growth. While recent fluctuations have impacted the stock, the company’s overall potential remains promising. Investors may find an opportune entry point given the current share price, which, if lower, could enhance the attractiveness of this investment opportunity. As a financial advisor, I would recommend closely monitoring the developments, particularly for those seeking long-term growth potential with a calculated risk.

Please note this is only an opinion and not financial advice. Direct stock investing is subject to business and market risks. Therefore, it’s highly recommended to do proper risk management and  your own due diligence before investing.

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