Is Theratechnologies Inc. (TSX:TH) the Healthiest High-Growth Pharma Stock on the TSX?

Theratechnologies Inc. (TSX:TH) is a very healthy pharma stock with a huge projected annual growth in earnings. Here’s why else it’s a strong buy.

| More on:
The Motley Fool

Looking for high-growth stock can be a full-time job in itself. Finding stocks that qualify as high-growth, but that also have healthy assets to back it up can be even harder.

One of the best ways to be sure that your high-growth stock will deliver the goods is to take a look at its market share. While most companies have a lot of competitors, every now then you will come across a stock that seemingly has none.

Let’s delve into the factors that might make today’s high-growth stock with a squeaky-clean balance sheet a buy.

Say hello to one of the top pharma stocks on the TSX

Theratechnologies Inc. (TSX:TH) is a specialist pharmaceutical stock in the HIV patient industry. While other stock markets have competitors in this field, Theratechnologies has the monopoly on the TSX index. With solutions for comfortable ageing and quality of life for HIV patients that are largely unmet, Theratechnologies is what you might call a pure-play pharma stock.

It’s also a hungry stock with a canny management strategy. Through its distributors, Theratechnologies has extended its reach across Europe, Israel, Norway, Switzerland, and Russia, as well as making recent inroads in Mexico and Brazil. Offering solutions for drug-resistant HIV sufferers, it’s involved with the development of a novel drug called Ibalizumab. Its main income is from the sales and distribution of its number one product: an abdominal fat reducing drug called EGRIFTA. A market-cornering drug, it has applications beyond HIV patients and can be used to treat forms of diabetes.

Insider investment is a bullish sign in general, and Theratechnologies has seen a rise in insider buying over the last nine months, further adding to the analysis that this stock is worth buying. However, with an overvalued share price of $13.41 compared to its projected future cash flow value of $0.99, value investors may be left scratching their heads.

A cheap stock with a very comfortable future

With under 30 employees and no debt, Theratechnologies qualifies as one of the healthiest high-growth stocks on the TSX. It has a very low level of unsold physical assets, and as such, it looks more than able to deliver on its high growth. Where risk does come into play is its reliance on distributor RxCrossroads, based in the U.S., and its price, which may be overdue for correction. Indeed, the latter may already be happening, as its recent share price spike seems to be declining.

That said, its expected annual growth in earnings is phenomenal. At a massive 105.3%, Theratechnologies could multiply your investment literally a hundredfold. It goes without saying that this beats the expected annual growth of the TSX index by a huge margin, so you can see why analysts are saying that this stock is a strong buy.

The bottom line

Never mind the overvalued share price – this stock is a potential gold mine. Theratechnologies is one of those rare stocks that can seriously multiply your investment. Given that its market is largely untapped — it meets medical needs that no other stock on the TSX is involved with — this stock automatically has the monopoly. All told, it looks like a strong buy from here.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. 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, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.

More on Investing

Arrowings ascending on a chalkboard
Tech Stocks

Why I Think Nuvei Stock Has Market-Beating Potential

Given its growth initiatives, expanding addressable market, and attractive valuation, I believe Nuvei has the potential to outperform the broader…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Need Passive Income? Turn $5,000 Into $23.85 Every Month

If you're looking for passive income that comes in like a paycheque, this dividend stock provides that to you along…

Read more »

A worker drinks out of a mug in an office.
Metals and Mining Stocks

5 Things to Know About Nutrien Stock in December 2022

Trading at heavily depressed multiples, Nutrien stock is a great opportunity, as it delivers solid financial results and an optimistic…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Shopify Stock Rose 15% in November: Is it a Buy Today?

Shopify (TSX:SHOP) stock rallied 15% this month but is still down 69% year to date, so should investors worry that…

Read more »

Man holding magnifying glass over a document
Investing

The 3 Most Oversold TSX Stocks to Watch Before 2023

Many oversold stocks are merely victims of market circumstances and potentially profitable bargains when they seem downtrodden.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

A TFSA Contribution Room of $88,000 and 1 Dividend Aristocrat Can Make You $172,330 Richer

A high-yield Dividend Aristocrat in the energy sector is a suitable holding for Canadians with $88,000 available contribution rooms in…

Read more »

Upwards momentum
Investing

Year-End Sales Tracker: 3 Growth Stocks Going for Value Prices

Growth stocks like Aritzia (TSX:ATZ) are on discount.

Read more »

Dollar symbol and Canadian flag on keyboard
Investing

2 Canadian Stocks I’ll Be Buying Hand Over Fist in 2023

Alimentation Couche-Tard (TSX:ATD) and another top growth stock could increase dividends in 2023.

Read more »