If you're looking to invest $2,500 somewhere it'll grow, but you're a bit leery of buying an increasingly overpriced and hyped-up growth stock like Nvidia, Fulgent Genetics (FLGT -3.42%) might be up your alley. Its shares are priced for bargain hunters, and its growth prospects are plentiful. 

Of course, it's usually the case that a promising company selling cheap has experienced a few bumps in the road, and the same is true for this one. Let's examine its recent performance to see if that matters and whether it'd be a fitting addition to your portfolio.

What's happening and why

Let's get all the bad news out of the way at once: Fulgent's shares have declined 25% in the past 12 months, and its quarterly revenue fell by 47% in the same period, arriving at $66.1 million in sales for the first quarter of 2023. Whereas the company spent the first part of the pandemic raking in millions by offering coronavirus diagnostic testing services, demand for COVID testing is plummeting, and it (hopefully) won't be recovering anytime soon. So that leaves Fulgent with the task of expanding its other sources of revenue, like for its genetic testing services. 

In that vein, it's planning to onboard new testing panels to add to its collection of more than 900 via a combination of organic capacity increases and bolt-on acquisitions. Cancer diagnostics will be an area of special focus.

Plus, since its acquisition of a pharma company in late 2022, it's also developing a drug in phase 1 clinical trials to treat head and neck cancers, and potentially pancreatic cancers too. So eventually, it will likely become a biotech using data from its oncology genetic testing business to power its research and development (R&D) pipeline of oncology medicines. And management thinks that will accelerate the drug development process, saving money along the way. 

Since Q4 2022, the company has been unprofitable due to the further erosion of its coronavirus revenue and the ramp-up of its core genetic testing services, which in the first quarter of this year brought in 150% more revenue than a year prior, topping $62.7 million. Soon enough, COVID testing revenue will be negligible, as it only brought in around $3.5 million. Given that it has $871.3 million in cash and marketable securities, minimal debt, and that it only used $9.9 million in cash in Q1 of 2023, its finances aren't under any immediate pressure.

Now's an appealing time to start a position

Management is expecting sales of $250 million for 2023, which indicates that the rest of the year is going to look a lot like the first quarter. In other words, the transitional period is going to be ending by the start of 2024, when the company's pace of growth will start to reflect its rapid penetration of the markets it plans to operate in for the long term.

And that is likely to coincide with the market recognizing that Fulgent is a potent growth stock once again. But at the moment, its valuation is still at rock bottom. 

Fulgent's price-to-book (P/B) multiple is a paltry 0.8, which basically means the company's valuation is so low that the total value of all of its shares outstanding (its market cap) is 20% less than the value of its tangible assets. And when considering that the average P/B of the biotech industry is 7.6, this stock looks like a huge bargain.

The biggest risk of an investment right now is that the shares will continue to tumble amid the uncertain market conditions. As an unprofitable biotech, Fulgent is particularly vulnerable to investor selling pressure, and you might need to wait a while before your $2,500 actually starts to grow significantly.

This isn't a stock that you should consider as a safe investment, even though its fundamentals are currently sound, and its future looks relatively bright. But if you can hold on to your shares for a few years, there's a solid chance that its valuation will rise alongside its revenue, and eventually its earnings.