I have been highlighting some of my top ideas for the year ahead.
So far I've discussed a small biotechnology name with a good chance of being taken over, a technology company on the leading edge of new developments in the cloud and a growing genomics play that could be a sleeper in 2020.
Another name that has good potential in 2020 is InMode (INMD) .
InMode was my "Stock of the Week" in October 2019 when it was trading around $26. It more than doubled and hit $58.76 on Nov. 18. Since then it has been correcting and now seems to have found support around $35 where there is a gap on the chart. I'm looking for a strong earnings report to trigger renewed momentum.
InMode is an Israeli company that develops, manufactures, and sells devices that use its unique, minimally-invasive radio-frequency (RF) technology in cosmetic surgery, dermatology, gynecology, and various other medical specialties. The company sells an RF energy source platform with interchangeable handpieces which generates 91% of its revenue.
Eighty percent of the company's sales are in the U.S., but it is expanding quickly into other countries, including Spain, India, and Australia. The company is launching three new RF platforms for dealing with cellulite, skin tightening, and face and neck tightening.
The company's IPO at $14 per share was on Aug. 8. It released second-quarter results a few days later, which pushed the stock into an uptrend. Revenues were up 55%, and earnings per share more than doubled to $0.45 from $0.21. Results for the third quarter were equally strong with revenues up 57% and EPS of $0.46.
Earnings are expected to hit $1.49 per share for full-year 2019 and grow to $1.65 in 2020, but the likelihood of additional upside is good. The stock trades at a trailing P/E multiple of 31x and is not cheap, but the strong growth will likely command a premium multiple.
This company has great growth potential, not only from the broadening of its product line, but by expansion into international markets. It should post a solid fourth-quarter report, which may bring back the momentum players that drove it to the highs back in November.
