Align Technology, Inc. (ALGN - Free Report) , the California-based dental major has joined the coveted S&P 500 benchmark, after the market closed on Jun 16. This clear aligner therapy, intra-oral scanners and CAD/CAM (computer-aided design and computer-aided manufacturing) digital services maker was earlier part of the S&P MidCap 400 index.
Per a Street Insider report, Align will be replacing Teradata Corp. (TDC - Free Report) on the S&P 500 index as the former has a current market cap of over $10 billion (at present $12 billion), thus making it suitable for the large-cap market space like the S&P 500 index. Whereas Teradata currently has a market cap of $3.75 billion, representing the Mid-cap space.
Align has been added to the S&P 500 Global Industry Classification Health Care Supplies Sub-Industry index. With a portfolio of 500 leading companies, which have approximately 80% coverage of the available market capitalization, the S&P 500 is an important metric for the U.S. equities. It is no wonder that the index is considered to be ‘the best single gauge for large-cap U.S. equities’.
It is therefore a big boost to the investors holding shares of Align. Since the news has surfaced, the stock gained by 3.9% to $149.7 at yesterday’s close.It has risen 8.4% over the past three months, ahead of the S&P 500’s mere 1.6% gain. As a result, the company’s share price has also outperformed the Zacks categorized Medical - Dental Suppliessub-industry’s gain of 2.8%.
With solid growth prospects, this Zacks Rank #1 (Strong Buy) stock is currently an attractive pick.
The market is currently encouraged by the company’s strong Invisalign prospects and growth in North America and international regions. Geographically, the company has a reputation of delivering success in the said regions. Particularly in North American continent, the company has observed a continued increase in utilization among its orthodontist customers.
Also the company has taken a big step toward clinching the huge and growing dental market opportunities in densely populated emerging geographies. It has recently inaugurated a new Invisalign treatment planning facility in Chengdu, China.
Align’s international Invisalign volumes were significantly up 41.3% during the last reported first-quarter 2017. Per the company, this performance has strongly banked on its solid Asia Pacific sales number. During the reported quarter in Asia Pacific belt, volumes surged 45.2% year over year, led by China, Japan, Australia and New Zealand.
The company is quite optimistic about this consistent growth in these geographies and is looking forward to several other investments, already in pipeline.
The company’s trend of consistent share buybacks reflects a strong free cash flow reserve. The strategy of disciplined share count reduction has created a considerable long-term value for the current stockholders.
Considering its healthy cash balance, Align’s buyback activity represents some encouraging prospects for the stakeholders.
Two other top-ranked medical stocks are Hill-Rom Holdings Inc. (HRC - Free Report) and Accelerate Diagnostics, Inc. (AXDX - Free Report) . Both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Hill-Rom Holdings has a long-term expected earnings growth rate of 17.5%. The stock has a solid one-year return of around 55%.
Accelerate Diagnostics has an expected long-term adjusted earnings growth of 30%. The stock has supplemented roughly 19.5% over the last three months.
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