Every week I look for a stock that has favorable technical conditions and may have a catalyst in the near term to help it move. This week my pick is InMode Ltd. (INMD) .
InMode is an Israeli company that develops, manufactures and sells devices that use its unique, minimally invasive radio-frequency (RF) technology for 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 moving quickly into other countries, including Spain, India, and Australia. The company expects to launch three new RF platforms for dealing with cellulite, skin tightening, and face and neck tightening in the next few months
InMode shares were offered at $14 in an IPO on August 8 and the company released second-quarter results a few days later. Revenues were up 55%, and earnings more than doubled to $0.45 per share from $0.21. Earnings for the year are expected to hit $1.39 per share and grow to $1.58 in 2020.
The stock trades with a trailing P/E multiple of 25x and a forward P/E multiple of 17x.
A week later the company named Paula Abdul as a brand ambassador which resulted in a sharp move higher.
Technically, the stock has held up extremely well while the majority of other IPOs have struggled. That is likely due to the company's great margins, profits, and cash flow. This is not a company still looking for profits as it grows revenues like many of the other hot IPOs.
The stock traded in the mid-$25 area for most of September and then dipped when the IPO market weakened on poor performance by names such as Peloton (PTON) and SmileDirectClub (SDC) . It has now regained its footing and is in a position to test recent highs at $28.
Earnings are scheduled to be reported before the open on November 5, and we are looking for positive expectations to help drive the stock. InMode is gaining some momentum Monday and I am adding shares.