Here's Why You Should Invest In Align Technology (ALGN) Now

Align Technology, Inc. (NASDAQ:ALGN) has been gaining investors’ confidence on consistent positive results. Over the past three months, the company’s share price has outperformed the broader industry. The stock has gained 47.2%, compared to the broader industry’s 5.4%. The company has also outperformed the 6.5% gain of the S&P 500 market.

This leading manufacturer and marketer of a system of clear aligner therapy, intra-oral scanners and CAD/CAM (computer-aided design and manufacturing) digital services used in dentistry, orthodontics and dental records storage has a market cap of $20.39 billion. The company’s five-year historical growth rate is also favorable at 19.5% compared with the industry’s 8.4%.

With solid prospects, this Zacks Rank #1 (Strong Buy) stock is an attractive pick for investors at the moment.

The company’s estimate revision trend for the current year has been positive. In the past 60 days, eight analysts revised their estimates upward, with no movement in the opposite direction. Resultantly, earnings estimates increased around 6.5% to $3.62 per share over.

Per our Zacks Style Score system, Align Technology has a Growth Score of B which reflects the company’s solid prospects. Our research shows that stocks with a Growth Style Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential.

In this regard, Align Technology has a favorable Net Margin (Net Income/ Sales) of 19.9%, as compared with the industry’s 2.5%. The company’s sales to assets ratio of 0.88, compared with the industry’s 0.87 shows that it is a favorable growth stock. Moreover, the projected sales growth rate of 34.3% surpasses the industry’s 3.4%.

Let’s find out whether the recent positive trend is a sustainable one.

Align Technology posted a promising third quarter of 2017, with earnings and revenues beating estimates.

We are encouraged by the company’s focus on expanding work flow options of iTero scanners. In this context, the company recently signed an agreement with Glidewell Dental to distribute the iTero Element intraoral scanning system with the latest glidewell.io In-Office Solution in North America. Per management, the collaboration will widen iTero’s reach to more than 50,000 dentists using Glidewell services. Notably, the company aims a launch in first-quarter 2018.

In addition, the company has signed a distribution agreement with Patterson Dental, a business unit of Patterson Companies, Inc. (NASDAQ:PDCO) , in August. Per the non-exclusive agreement, Align Technology’s iTero Element intraoral scanning system will be available as part of Patterson Dental’s CAD/CAM portfolio in the United States and Canada.

Moreover, Align Technology has been seeing strong international sales, especially in the EMEA and APAC regions. The third quarter marked another milestone for the company where China became the second largest market globally with United States topping the numbers.

Recently, the company opened its first office in Canada to support growth in the region.According to the company, Canada is its second-largest market based on Invisalign case volumes.

Also, the company witnessing balanced sales growth across all its channels in the recent past, primarily driven by high InvisAlign Technology case volumes buoys optimism.Solid performance in the summer drove Invisalign volumes in the global teen market.

We are also upbeat about the company’s solid InvisAlign Technology prospects and growth in North America and internationally. Align Technology’s receipt of two U.S. patents for SmartTrack Aligner material also buoys optimism.

On the flipside, adverse foreign exchange translation continues to raise concerns for Align Technology’s international operations. Also, escalating costs and expenses are weighing on margins. Moreover, a tough competitive landscape and other macroeconomic headwinds pose a threat.

Other Key Picks

Other top-ranked stocks in the broader medical sector are PetMed Express, Inc. (NASDAQ:PETS) and Luminex Corporation (NASDAQ:LMNX) . Notably, PetMed sports a Zacks Rank #1, while Luminex Corporation carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed has a long-term expected earnings growth rate of 10%. The stock has rallied roughly 81.6% over a year.

Luminexhas a long-term expected earnings growth rate of 16.3%. The stock has gained 3.6% over a year.

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