StemCell Therapy

Equity markets seem to have lost their compass at present. Politics and trade deals dominate our analysis, leaving hardly any room for standard stock talk that many of us love. Its tempting to abandon logic for emotion and resort to passive investing rather than individual stock picking. But that would be a big mistake! There are too many obvious themes that are durable and easily lead to solid stock selections.

During times of great tumult, I focus on thematic trends that have the greatest success of prevailing despite political or even economic shifts. For example, I have discussed the relentless need for cyber security that will never end, and the way to invest in that theme. I also invest in cloud storage facilities, because we need a bottomless well to store our endless data production. Are there any other themes out there? Absolutely: the aging population that is growing at a very rapid rate will create demand for many medical services.

According to the United Nations Population Division, in the next 25 years, the global population of people aged 65-and-older will double to almost 1.3 billion. Think thats a lot? The ovrt-80 age group is expected to more than triple in absolute size over the next 35 years! That age group is expected to rise from 1.7% of the global population today to 4.5% by 2050. In thinking about these demographics, seniors will need many services that are inelastic and not dependent on economic conditions. Just like we will continue to need data storage or data security, our aging population will need maintenance services to stay in the best physical shape possible for active seniors. From a health care perspective, the low-lying fruits for seniors are eyesight and hearing.

Consider vision first. The numbers are simple: 50% of people above 80 years old will develop cataracts, which cause vision problems. Surgery is the only way to remove a cataract. About 5 million people in the U.S. have cataract surgery. This is the most performed surgery in the United States and is a very large number. World-wide there are about 10 million performed. Since the aging population is growing and at least one-half of them will develop cataracts, this is one of the most obvious investing opportunities to research.

There are many areas to examine, but I search for companies that are developing exciting medications to treat vision problems for seniors. Eyepoint (EYPT) is a tiny public company that has gained FDA approval for treatment in post-cataract care, and other sight-threatening diseases.

Simply put, EYPTs products replace the patients need for 100 eye drops to a single, tiny time-release implant administered during the surgery. This treatment is extremely important to prevent post-surgical inflammation and other complications. Additionally, EYPT uses the same time release delivery technology to administer therapies for various sight-threatening eye diseases with very good results. Their patents dont expire until 2034, giving the company plenty of time to capture a large market share.

At about $2 per share, I think that buying EYPT now is getting in early, but the company has already locked down FDA and insurance approval. I estimate that every 1% market share in U.S. cataract surgery market bolsters annual revenue $30 million. Every 1% capture in the eye disease market adds another $8 million to the top line. Given that the companys latest 12-month revenue was $12 million, a 1% market gain in both segments would triple revenue. Keep in mind that China trade wars, threats of impeachment, etc. should have no impact on this simple analysis.

Lets move on to hearing. Like vision, understanding the addressable market for hearing issues is simple and straightforward. More than 50% of people over 75 years old will develop disabling hearing loss. Currently, there are more than 16 million people in the U.S. that are over 75. That number is expected to grow as a percent of our total population, so I think the market for hearing aides is an obvious opportunity. But unlike vision research, the hearing aid market has been astonishingly slow to leverage the latest technologies that other consumer products employ (think Alexa for example).

I like Sonova Holding (SONVY) because it has incorporated the latest sophisticated technologies to improve hearing aid product. I have written in detail about this company before, and still think this little-followed stock is has great potential for growth.

At first, it seems that the data security and storage markets would have very little in common with the senior healthcare industry. But when viewed through the common lens of future demand driven by growing customer bases, there are striking similarities. Contrast this to the failed unicorns like Peloton, Wework, Smile Direct Club, which also share a common ground: difficult-to-predict future markets. When choosing my investments, I prefer to take the easier, obvious path. Shouldnt you?

Read the rest here:
Two Great Stocks Of Sight And Sound - Forbes

This entry was posted on October 15, 2019 at 6:45 am and is filed under Eye Sight & Vision. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed. |