What: United Therapeutics (NASDAQ:UTHR), a biotechnology company developing products aimed at the unmet medical needs of patients with chronic and life-threatening conditions, saw its shares dip by over 11% in August. Fortunately, this double-digit drop doesn't appear to be the result of a particular negative catalyst but is rather part of the biotech industry's widespread sell-off last month.
So what: The moody market developed a bad taste for nearly all biotechs last month, regardless of their fundamentals or future growth prospects. Perhaps most importantly for investors to understand, though, is that this sell-off in many ways concentrated on stocks like United Therapeutics that were having a strong year. United Therapeutics, for instance, was up over 30% for the year prior to this pullback in August:
Now what: United Therapeutics looks, to me, like a bargain after this market-fueled move lower. The company's relatively new pulmonary arterial hypertension drug, Orenitram, is seeing rocket-like growth saleswise, evinced by its 290% increase in sales to $25.8 million in the second quarter, compared to a year ago. And management believes the drug's hyperbolic growth trajectory is going to be sustainable for at least a few more quarters.
With a forward price-to-earnings ratio that presently sits at 13.4 and a bottom line that is projected to grow by over 18% on average for the next five years, I think this is a mid-cap biotech that warrants a deeper look by investors in search of stocks with high growth potential and deep value.
George Budwell has no position in any stocks mentioned, and neither does The Motley Fool. 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.