Investors often wonder what it takes to hit a homerun investment. That’s a difficult question to answer because there are lots of variables that go into determining which stocks will generate the largest returns. One of the most important aspects in picking a long-term winner is to look at a company’s recent developments and analyze how those developments might affect future performance. Two companies that appear to be headed in the right direction are Pfizer (NYSE:PFE) and Tristar Wellness Solutions (TWSI.PK).
Pfizer has had an impressive run over the past couple of years. Over that period, shares of Pfizer have increased by more than 49 percent. In contrast, the overall market (using the S&P 500 SPY ETF as the measure) has only increased by about 36 percent. So investors in Pfizer certainly have to be pleased with the performance.
One of Pfizer’s most important products is Prevenar 13. Prevenar 13 is a vaccine that was first approved for use in infants and children in Europe. Now, it is approved for use in more than 120 countries. It is the most widely used pneumococcal conjugate vaccine in the world with more than 640 million doses of the vaccine having been distributed. The vaccine is also approved for use in adults 50 years of age and older.
The vaccine was approved in 2011 on the condition that Pfizer conduct a study proving that the shot would protect against pneumonia. On February 24, Pfizer announced positive top-line results of its community-acquired pneumonia (CAP) immunization trial in adults. The trial met both the primary objective as well as the secondary objectives.
Pfizer’s primary objective of the study was to demonstrate efficacy of Prevenar 13 against a first episode of vaccine-type community-acquired pneumonia. The secondary objectives included:
- Efficacy against a first episode of non-bacteremic/non-invasive vaccine-type CAP.
- Efficacy against a first episode of vaccine-type invasive pneumococcal disease (IPD.)
Pfizer will present full data on March 12 at the International Symposium on Pneumococci and Pneumococcal Diseases. The vaccine is expected to generate approximately $4.4 billion in revenue this year, according three analysts surveyed by Bloomberg. This is a big win for Pfizer, and one that could pave the way for years of significant revenue generation.
Tristar Wellness Solutions
Tristar Wellness Solutions is a health and wellness company that is focused on under-met consumer opportunities in the OTC and professional marketplace. The company’s main strategy revolves around creating innovative, science-based solutions and brands to meet the growing demand for personalized care solutions. Tristar Wellness Solutions has two major brands:
- HemCon Medical Technologies — A wholly owned subsidiary of TriStar Wellness Solutions. HemCon Medical Technologies is a fully integrated medical device company that is focused on advancing the standard of care in the civilian and Armed Forces markets.
- Beauté de Maman –– A unique line of health and beauty products developed by a board-certified OBGYN to treat problems related to the physiological and hormonal changes experienced by women during pregnancy.
Recent developments at Tristar has allowed the company to produce substantially better results in 2013 than in 2012. During the first nine months of 2013, Tristar Wellness Solutions has generated $2.57 million in revenue, compared to just $4,000 over the same period in 2012. The bulk of that revenue was generated during the second- and third-quarter of 2013. Tristar also ended the third-quarter with approximately $315,000 in cash. While that may not seem like a lot at first glance, investors should also be aware that Tristar finalized a $1 million line of credit with Sussex Associates on November 25, 2013. This agreement will provide Tristar Wellness with the resources it needs to expand marketing operations and product development.
As mentioned earlier, Tristar’s two major brands are HemCon and Beauté de Maman. HemCon designs and manufactures hemostatic bandages and dressings, which are used by the military, hospitals, dental, and emergency medical services professionals to control bleeding. The HemCon product line includes:
- HemCon Patch PRO
- HemCon Bandages PRO
- ChitoFlex PRO Hemostatic Dressings
- GuardaCare XR Surgical
- ChitoGauze PRO and GuardaCare PRO
- HemCon Dental Dressings
- Synaero Hemostatic Gel
- M*doc Products
The HemCon product line has been instrumental in helping to grow Tristar’s revenue in 2013. The success of the entire product line led Tristar Wellness to announce its expansion of their dental product line in North America. The new oral woundcare line will help improve oral wound dressing as well as pain relief following tooth extractions and other oral surgical procedures. It is estimated that approximately 10 million wisdom teeth are extracted annually in the United States alone. The cost of these extractions totals approximately $3 billion. If Tristar’s marketing campaign can help bring attention to its products, the company could profit substantially from its oral woundcare products.
Another exciting piece of news for Tristar Wellness is that the company recently announced that it has begun its national retail expansion of its Beauté de Maman product line. Tristar is now rolling out these products to drugstores, grocery chains, and natural food retailers across the country. Tristar hopes that it can penetrate over 5,000 stores by the end of the year. Based on positive retailer responses, the company is confident that it can achieve that goal.
The Beauté de Maman product line is the largest range of products for pregnant and nursing women that are offered at retail locations. The recent launch is exciting for not only Tristar Wellness, but also the retail locations as these products cater to an under-served market. The uniqueness of the product line is a big reason why 5,000 stores is more than possible by the end of 2014.
Tristar Wellness Solutions is currently valued at just under $20 million. However, that would appear to be a significant undervaluation based upon recent revenue numbers. The company has generated an average of $1.28 million over the past two quarters. Based on what the company already has in place, the company should generate at least $5 million in sales in 2015. However, investors should also take into account the recent rollout of its Beauté de Maman products and the expansion of its oral woundcare line. These new developments could push Tristar closer to the $10 million mark by 2015. Since Tristar currently has a price/sales ratio of 6.50, $10 million in annual revenue would mean a price per share of $2.81 (based on 21.35 million shares outstanding.) That would represent a 212 percent return based on Friday’s closing price.
Both Pfizer and Tristar Wellness Solutions appear to be making the right moves in order to continue advancing their respective businesses. Although each company carries a degree of risk, especially since the biotechnology industry has gone almost straight up over the past couple years, the potential of each company is indisputable. It will be interesting to look back in a year and see how each company has performed.