3 Stocks With Jaw-Dropping Growth Potential

MiMedx, The Medicines Company, and Pacira Therapeutics should all see huge leaps in their earnings going forward. Here's what you need to know.

Jul 18, 2014 at 5:03PM

The biopharma industry has exploded with new public companies over the last two years. As a result, it's become all too easy to miss promising companies that offer stellar growth prospects going forward. 

MiMedx (NASDAQ:MDXG)The Medicines Company (NASDAQ:MDCO), and Pacira Therapeutics (NASDAQ:PCRX) are three biopharma stocks that offer impressive potential worth a deeper look.

MDXG Chart

MDXG data by YCharts

MiMedx is seeing impressive demand for its wound-healing technologies
MiMedx is a small-cap biopharma that develops wound healing technologies from human amniotic membranes, taken from donated placentas. The company's product portfolio includes AmnioFix for surgical procedures and EpiFix for chronic and surgical-based wounds.

Earlier this year, MiMedx increased the lower bound of its 2014 annual guidance, which now ranges from $105 to $110 million. If this guidance holds, it means that MiMedx shares are presently trading at roughly seven times projected 2014 revenues. With earnings expected to show up next year to the tune of 16 cents per share according to Capital IQ, MiMedx shares are starting to look interesting to me.

That being said, shorts have built a large position in this stock, suggesting that this growth story may have some holes. Shorts have targeted MiMedx for three reasons: a SEC investigation into the CEO that was recently dismissed, payer issues that may slow the market uptake of its technologies, and a bearish forecast over the commercial opportunity for AmnioFix and EpiFix.

My view is that the trend speaks for itself. MiMedx has 3 years of rapidly increasing sales on its side and the SEC investigation was never a threat to the company, only the CEO for his actions in a prior position. At the end of the day, MiMedx is gaining ground in an exciting space, making it a stock to watch.

The Medicines Company is well positioned for growth
The Medicines Company sports a diversified product pipeline headlined by Angiomax, a potent blood-thinner used primarily in heart-related procedures. Angiomax saw sales increase by 9% year over year in the first quarter of 2014, raking in $155.7 million. The drug is under some potential generic threat after an unfavorable court ruling, so it's important to watch legal issues closely with this company given that Angiomax represents 88% of the company's overall revenue.

Although Angiomax has seen impressive growth, there is a lot more to this company worth checking out. In particular, The Medicines Company has a handful of registrational stage products either under review or nearing a review with the Food and Drug Administration.

One I'd like to highlight is Fibrocaps, a dry powder formulation that is used to stop excessive bleeding in surgery when other means are ineffective. The drug's Biologic License Application is set to be reviewed by Jan. 31, 2015, and the company estimates peak sales at around $300 million per year. Of course, it hasn't all been sunshine and daisies for the company -- Cangrelor, its anticoagulant with peak sales of around $400 million, was rejected by the FDA in April of this year.

The Medicines Company bottom line is rebounding as more clinical-stage products move into the commercial phase of their life cycle. I'm looking to see strong levels of growth in terms of earnings and revenues from this mid-cap biopharma over the next year.

Pacira Therapeutics' growth has been fueled by Exparel
Shares of Pacira Therapeutics have blasted northward over the last year by 140% based on growing sales for its nonopioid postsurgical pain analgesic Exparel. Presently, the drug is commonly being prescribed for postoperative pain in procedures like bunionectomy and hemorrhoidectomy. 

But the company is planning on expanding its use in the coming years to include a potential nerve-block indication, with global peak sales estimates north of $500 million per year, if its label can be successfully expanded. That being said, I'm concerned Pacira's market cap of $3 billion has baked in a lot of the explosive top line growth that would come from this potential expanded use for Exparel.

Foolish wrap-up
The biopharma industry is rich with compelling growth stories at the moment, driven by new approvals and improving clinical trial designs. Among the three growth stocks discussed above, Pacira's story is the only one that seems to have garnered much attention among investors thus far, evidenced by the strong appreciation of its share price. Nonetheless, I think investors should definitely dig deeper into MiMedx and The Medicines Company, which appear to offer decent upside potential with manageable risk profiles going forward. That said, biotech is inherently a risky area to invest -- any number of things could prevent this epic growth from being realized (including failing to get FDA approval and a weak drug launch) -- so be careful when considering these high-risk/high-reward opportunities.

Jaw-dropping growth potential for your portfolio
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George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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