3 Halal HealthCare Stocks
This article covers the valuations of 3 Halal Stocks in the Health Care Industry:
1- Oscar Health (OSCR)
2- Beam Therapeutics (BEAM)
3- Invitae (NVTA)
There is perhaps no cause more in line with Halal Investing than aiding people with their healthcare.
Below are 3 healthcare stocks that have passed our halal audits.
1. Oscar Health (OSCR)
(Oscar Health Halal Report Card)
Oscar Health claims to be the first health insurance company built around a full stack technology platform. Founded in 2012, the web and technology-focused company set out to simplify coverage and make the U.S. healthcare system easier for patients to navigate.
The size of this opportunity is huge.
The entire US health care system’s costs total $4 trillion a year. The amount of inefficiencies in the system are staggering and so too are the opportunities for improvement.
Health insurers play a crucial role in creating a better system as they distribute 75 cents of every dollar spent across the healthcare industry.
Oscar Health IPO’d in the beginning of March 2021 and currently has around a $6 billion dollar valuation ($30 per share as of the date of this article).
Included in this valuation is a net cash position of around $2.3 billion.
Total Revenues for Oscar health in 2020 were $462 million, so it’s trading at around 13 times its 2020 total revenue.
For Oscar, challenges include proving they have a sustainable moat, and that their business model can potentially produce a profit.
Between 2019 and 2020 expenses increased while revenue decreased. This is not the right trend.
I’d like to see this dynamic flip before I consider investing.
2. Beam Therapeutics (BEAM)
(Beam Therapeutics Halal Report Card)
Beam is pioneering the use of “base editing” and “prime editing” which are forms of gene editing to treat disease.
Beam initially started with “base editing,” the simplest form of gene editing that changes a single DNA letter.
Beam also acquired exclusive rights to a technology called “prime editing,” which can delete “long lengths of disease-causing DNA or insert DNA to repair dangerous mutations.”
Prime editing substantially expands the scope and capabilities of genome editing, and in principle could correct up to 89% of known genetic variants associated with human diseases.
Beam Therapeutics is different from Crispr gene editing technology in that rather than making edits to DNA by cutting it and inserting a replacement which may have unintended consequences, Beam explains that its base editing technology works more like a pencil wherein genetic code is erased and rewritten one letter at a time.
Base editors are not just more efficient than CRISPR; they also cause fewer errors.
Beam’s promising technology has caused it to trade for a market cap of close to 6 billion ($96 per share as of this article) even though it has basically no revenue yet.
Given the wide applications for Beam's base editing technology, Beam's prospects are both high risk and high reward if you're in to those kinds of things.
3. Invitae (NVTA)
Invitae is in the business of delivering genetic testing services that support a lifetime of patient care – from inherited disease diagnoses, to family planning, to proactive health screening to personalized diagnosis, treatment and monitoring of cancer.
What sets Invitae apart from competition is their harnessing of technologies like robotics, artificial intelligence, machine learning and software engineering, to help with diagnosing and treating disease.
I am especially fond of artificial intelligence plays where the company that gets the most data wins most of the market. This happens through a virtuous cycle where a small advantage in data attracts more customers to the company's products , the company then is able to acquire even more data from these new customers and its advantage grows even more.
Invitae currently trades at a 8.5 billion dollar valuation, $43 dollars per share. With ~$300 million in revenue from 2020 its trading at ~28 times revenue.
With 30% growth in revenue from 2019 to 2020, 28 times revenue is certainly on the rich side. However, I do think Invitae has a chance to become the leader in genetic testing which could more than justify the current richness of its valuation.
From a return vs. risk perspective, I see invitae offering the best ratio out of the 3 stocks covered in this article.
I currently hold no positions in any of the aforementioned stocks.
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