It isn't a popular time to be buying up coronavirus stocks. With President Joe Biden projecting that by later this year, life could be back to normal, many investors are shifting away from stocks that could see their sales numbers drop in a post-pandemic world.

That is part of the reason why Quidel (NASDAQ:QDEL), which is coming off a monster quarter, has seen its share price tank nearly 40% in just the past month, while the S&P 500 rose by less than 1%. Despite the bearishness, for me, the dip presented an opportunity that was too good to pass up. I thought $175 was a great price at which to buy the stock, and so getting it at a little over $130 was just too appealing. Here is why I decided to buy shares of Quidel and why there is plenty of reason to be bullish on the stock.

People working in a lab.

Image source: Getty Images.

1. COVID-19 testing isn't going away

On Feb. 18, Quidel released its fourth-quarter earnings. Its sales for the period ending Dec. 31, 2020 totaled $809.2 million, which was up 432% from the prior-year period. But of that total, $678.7 million, or 84%, came from COVID-19 diagnostics.

Quidel is a big name in testing, and its products have been in high demand to help contain the spread of the coronavirus. But if the pandemic ends this year and life gets back to normal, investors might expect a sharp decline in the company's revenue.

While it is likely that Quidel will see a drop in sales, that doesn't mean they will just disappear. If Moderna CEO Stephane Bancel is correct, COVID-19 could be around forever. Sure, that might be a biased opinion coming from a company that has made a vaccine for the disease and that would stand to benefit if COVID-19 never went away. But it's not looking likely that COVID will disappear in 2021, and we'll simply never hear of the virus again.

Vaccines will help stop the spread of the virus, but there's one problem: Not everyone is eager to (or is able to) get one. According to a study from Pew Research, 21% of adults in the U.S. don't plan to get a vaccine. That means that the need for testing is going to be there, at least until health officials believe that COVID-19 no longer poses much of a risk.

What stood out to me from Quidel's most recent earnings call was that the company has been turning away opportunities because it has been so busy. CEO Doug Bryant stated that it has "significant interest" from travel, sports, and dining markets that it simply hasn't been able to pursue thus far.

These are businesses that will benefit from COVID-19 testing because otherwise, there will be a risk of an outbreak, and that can prevent them from operating at capacity. With these opportunities still available to Quidel, the company could continue to generate strong sales numbers for the foreseeable future.

2. Quidel's stock is incredibly cheap

Things went from bad to worse for Quidel earlier this month when the company said that it expects 2021 revenue to come in around $2.5 billion, well below the $2.9 billion that investors were expecting. Management noted that in recent months, demand for testing has "softened significantly." But it is important to note that this is a conservative guidance and doesn't factor in potential upsides, including selling tests outside of the U.S. and potentially strong demand for its QuickVue self-test kits (the U.S. Food and Drug Administration issued an emergency use authorization for the company's at-home test on March 1).

However, even at $2.5 billion in revenue, Quidel could be a dirt-cheap buy. In 2018 and 2019, the company's profit margin was around 14% (I'm excluding its impressive 49% margin in 2020 for the sake of being conservative). If the company were to earn a similar rate on $2.5 billion, Quidel could make $350 million in profit for this year. With about 44 million diluted shares outstanding, that would put its per-share profit at $7.95. At a current share price of close to $140, that puts the stock at a forward price-to-earnings (PE) multiple of 17.6. Even before the pandemic, investors were paying a much higher multiple for shares of Quidel:

QDEL PE Ratio Chart

QDEL PE Ratio data by YCharts

And the average stock in the Health Care Select Sector SPDR Fund trades at more than 27 times its earnings. Even with the soft revenue guidance, Quidel's stock is cheap.

3. Quidel is also a low-risk investment

Another reason I decided to invest in the company is that Quidel isn't too risky of a stock. As mentioned above, its margins have been strong, and even though it may decline in sales, it looks to be a safe bet to continue to turn a profit. This is not a speculative, high-risk business that's in danger of going under, or one that needs retail investors from a Reddit forum to prop its shares up.

Quidel, at its worst, is a testing company that may struggle to generate the growth numbers that it posted in 2020. But at a modest valuation, that isn't a bad business to invest in, as there will always be a need for testing in the healthcare industry

4. It has solid cost management

One of the reasons I'm not too worried about the company is that even if times get tough, I'm confident Quidel's management can keep its costs down and still turn a profit. What stood out to me on its recent earnings reports was that despite the spike in sales in 2020, the company's expenses didn't skyrocket along with revenue. 

In 2020, Quidel's operating expenses totaled $288.5 million and were just 17% of its total sales. In 2019, that percentage was up around 43%, and the year before that it was at 42%. This suggests that even with a drop in sales, Quidel can still comfortably post a profit. If a business can grow without significantly adding on more expenses, that is a great sign that as it scales up, its earnings will also get much stronger.

Bottom line

While many investors may be down on Quidel's future, things don't look all that bleak for the company. And with strong fundamentals and the stock trading at fairly cheap prices right now, it is a low-risk pick that has the potential to deliver some outstanding returns.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.