We recently passed the one-year anniversary of a bold call I made about a MedTech leader that was inspired by a reality show.
On June 20, 2020 this pioneer in aesthetic medicine was still flying under Wall Street’s radar.
And that’s just fine with us. As savvy tech investors we know all too well that by beating the so-called “pros” to the punch, we set ourselves up to really crush the market.
Since then, the S&P 500 has risen 39.8% in a historic run, which is nice and all, but the firm I recommended last June smoked those returns by a stunning 560.8%.
As a major disruptor in the plastic surgery market, this firm’s stock is way ahead of my forecast and has actually gained 263% for a nearly four-fold increase in 13 months.
Even with this much growth, I see plenty of upside ahead.
The Price of Perfection
In the age of Instagram and reality television, many people care a lot about their appearance.
You may recall that I recommended this stock after my wife and I had been binge-watching Botched on E!.
It’s a long-running TV show that follows two renowned doctors as they help patients correct horrific cosmetic surgical mishaps – hence the name of the series.
Shows like Botched, Dr. 90210, Nip-Tuck and even the short-lived mess that was FOX’s The Swan have all put the $43.9 billion cosmetic surgery market front and center in the last couple decades. Botched in particular has raised awareness of the complications and potentially disfiguring outcomes from bad plastic surgery.
This growing awareness of the potential cosmetic disasters of plastic surgery is what holds so much appeal for savvy tech investors.
As I pointed out last year, I believe that hundreds of thousands of people could avoid these cosmetic nightmares by choosing the right high tech, minimally invasive procedure.
Beauty in the Age of Technology
Enter InMode Ltd. (INMD). Founded in 2008, InMode introduced a completely new technology into the world of plastic surgery.
When you hear the words “plastic surgery,” chances are you think of being put under by an anesthesiologist, and a doctor using a scalpel to remove tissue or get something stapled.
It’s an ordeal that takes a toll of more $20,000-not covered by insurance, permanent scars, and weeks or even months of recovery.
And that’s just the cost of a successful procedure that doesn’t need to be fixed on a show like Botched.
Inmode’s cutting edge platform uses radio waves sent between a small electrode inserted under the skin using just topical anesthesia and another electrode held by the physician.
Inmode offers the “Holy Grail” of cosmetic procedures – no scarring. The radio waves destroy fat cells only in the targeted area, making for a very precise and painless procedure.
The best part? Recovery takes just a day. Plus, patients can remain awake during the entire procedure.
And if that’s not enough to recommend it, InMode’s Radio-Frequency Assisted Lipolysis (RFAL), as the technology is called, goes one step further. It also tightens the skin at the same time as it removes fat.
Traditional fat-removing procedures that use scalpels, lasers, or “fat freezing” require surgeons to cut away loose skin. That leaves scars, takes a long time to heal, and doesn’t look natural.
INMD’s Stock: By the Numbers
I have to say my observations were way out in front on this stock.
Just four weeks ago, Investors Business Daily wrote a flattering profile of Inmode for the paper’s “New America” section about the market’s most elite stocks.
That article made several of the same points I raised with you more than a year earlier.
Bottom line: sales and earnings are on fire because this is a much safer and less expensive alternative to plastic surgery.
In fact, on July 12, the stock popped 12.5% in a single session. The reason: the company put out a press release forecasting that second-quarter sales would hit a new record and raised guidance for all of this year.
I have to say I’m not at all surprised. The company continues to grow because of its superior technology that is catching on with the public.
Over the past three years, it has increased per-share profits by 68%. At that rate they double just shy of every year.
That would imply that earnings could double three times in the next three years.
But if you have followed along with me, then you know I like to make conservative forecasts. I like to under promise and over-deliver.
I also like to focus on taking advantage of major and important trends that are shaping the market and could lead to outsized gains. That’s why I’d like to bring up another big trend that could have a huge impact on medicine.
Taking on the International MedTech Market
Talk about a global player. Inmode is based in Israel, and counts North America as its main market, accounting for 86% of sales. But it has recently moved into Australia, China, and India.
I believe this is an incredibly efficient firm. After recently raising forecasts, it now expects to wring up sales this year of up to $315 million.
And yet it operates with just 320 global workers. That translates to $2.1 million in sales for each of its 156 direct sales reps.
Now you know why I’m steadfast in my loyalty to this firm. I believe InMode has proven itself a bona fide growth machine with lots of upside ahead.
My Strategic Tech Investor Forecast
So, I’m projecting that INMD will roughly double in a little more than three years.
We’ll get a better look at how the firm is operating against its plan when it reports quarterly earnings on August 4.
Should it miss in the current environment, the stock could sell off.
If that happens, you should think of that as a great opportunity to load up at a discount.
Because this is one of those stocks you want to have in your tech-wealth portfolio for the long haul.
Cheers and good investing,
Michael A. Robinson