The fiscal cliff is temporarily on hold as lawmakers buy time with a makeshift deal that is going to be revisited within the next 2-months. Along with the cliff, the country still faces the debt ceiling which is expected to be another political showdown. With the new Congress now in place and Speaker Boehner still holding the gavel, there is not much expected to change that will effectively end the impasse in Washington.
With that in mind investors have a lot to think about regarding timing, day-trading and preserving their capital in an unstable macroeconomic environment. Searching for companies that are not dependent on overall market appreciation that have organic growth is difficult to find. Most of the time companies in the biotech industry are on their own schedule, with stock movement dependent on new products and regulatory approval. Hidden gems can skyrocket when finding the right stock, and Cytori Therapeutics may be one of those stories in 2013.
Cytori Therapeutics (NASDAQ: CYTX) discovers and develops cell-based therapeutics utilizing adult stem cells derived from fat tissue. The Company’s investigational therapies target cardiovascular disease, spine and orthopedic conditions, gastrointestinal disorders, and new approaches for aesthetic and reconstructive surgery. The medical technologies harness the potential of adult regenerative cells from adipose tissue. The Celution System family of medical devices and instruments is being sold into the European and Asian cosmetic and reconstructive surgery markets but is not yet available in the United States.
The competition in the industry is moderate, with Baxter International as the behemoth of the sector. The company also faces competition from mid-cap companies such as ConMed Corp, Invacare Corp and BioMimetic Therapeutics. In general it is a difficult sector to penetrate, as companies need a lot of funding for research, which is not prevalent at the moment. New companies do pop up every year but are unable to break into the market due to the costs associated with the business, and varying regulatory standards in each country.
The company only has one piece of outstanding debt, a $25 million term loan set to mature on March 1, 2015. The company recently raised capital by selling 7 million shares of stock to aid in the development and sales of Celution System products. There has been quite a bit of insider buying occurring during the month of December. On December 19th President Marc Hedrick purchased 10,000 shares. The same day Directors Rickey David bought 32,000 shares and Dean Lloyd purchased 25,000 shares.
The stock is trading at around $2.75, with a 52-week range of $2.01 – $4.93. Technically the chart looks very favorable with little downside risk. The 3-year low on the stock is at $2.00, with a tremendous amount of support at that level. Over the past 3-years the stock has been as high as $9.40 and an entry point below $3.00 is a good buy.
One catalyst for the stock is that company will be webcasting their corporate presentation at the Biotech Showcase™ at 11:30 AM PT on Tuesday, January 8. The presentation will be held at the Wyndham Hotel in San Francisco. With insider buying heavy the last month, a growing product line and a low valuation, CYTX is a compelling investment in 2013.