Shares in ANGLE (LSE: AGL) jumped by as much as 6.4% during early trade this morning, after the company reported that it had secured the first commercial sales of the group’s Parsortix system.
Big market, slow growth
The Parsortix system is the specialist MedTech company’s flagship product that uses patented micro-fluidic technology to capture and harvest circulating tumour cells from blood. Angle believes that the addressable market for this kind of product could be worth as much as £250m, although the company didn’t reveal any details about the customers or the revenue derived from the initial sales reported today. Angle expects revenue from the medical research tool to be initially modest as it grows over time.
City analysts believe that the Parsortix system could generate sales of £340,000 for the year to 30 April 2016, which works out at around four-to-five months of sales. Next year, sales are expected to pick up and analysts are predicting Angle will generate revenues of £2.2m for the full-year. However, even though sales of Angle’s Parsortix system are set to take off over the next 12-to-24 months, analysts expect profit to remain elusive for the time being.
So for now Angle remains a speculative play. Until the company is able to show that it can generate a consistent profit, its shares aren’t suitable for risk-averse investors.
Another strong performance
In what’s become something of a regular occurrence for Advanced Medical Solutions (LSE: AMS), the company issued another upbeat trading update today, reporting that it was on track to meet the market’s expectations for revenue and profitability for full-year 2015.
What’s more, Advanced Medical said today that the regulatory approvals received this year for its new antimicrobial foams, together with the clearance to market its sutures in the US, are expected to contribute to growth in 2016.
Commenting on today’s trading update, Chris Meredith, CEO of AMS, said:
“The Group continues to deliver strong organic growth supported by a pipeline of new products coming out of our Research and Development teams. We are confident that AMS is very well positioned to deliver further growth.”
If you’re looking for an investment to revolutionise your portfolio’s returns, Advanced Medical could be an excellent choice. The company has consistently outperformed since 2009. Net profit has grown at a compound annual rate (CAGR) of 36% since 2009, and reported earnings per share have expanded at a CAGR of 27.7%. Over the same period, the company’s shares have gained 450%, outperforming every major stock index by several hundred percentage points.
That said, Advanced Medical’s shares don’t come cheap. They’re currently trading at a forward P/E of 26.9, falling to 25.3 for 2016 and support a dividend yield of 0.4%. Still, sometimes it’s worth paying extra for quality.
The bottom line
Based on my analysis, Advanced Medical looks attractive after today’s update, but risk-adverse investors should avoid Angle.
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.