Catalyst Pharmaceuticals Inc (NASDAQ:CPRX) Fits Louis Navellier’s Growth Investing Strategy with Strong Earnings Momentum and Rising Sales

Louis Navellier’s The Little Book That Makes You Rich presents a growth investing strategy centered on finding stocks with strong earnings momentum, rising sales, and better profitability. The method focuses on eight main rules, such as positive earnings revisions, wider margins, and high return on equity, to spot companies with strong growth prospects. By applying these filters, investors look for stocks likely to see notable price gains.

Catalyst Pharmaceuticals Inc (NASDAQ:CPRX) fits well with Navellier’s approach. The biopharmaceutical firm, which focuses on rare disease treatments, shows solid financial metrics that match several criteria from the Little Book strategy. Here, we explore how CPRX meets these important conditions.

1. Positive Earnings Revisions & Surprises

Navellier notes that rising earnings revisions point to better business outlooks, while regular earnings beats strengthen analyst trust. CPRX has had its next-quarter EPS estimates raised by 5.75% in the last three months, showing optimism about short-term results. The company has also topped EPS estimates in each of the past four quarters, with an average beat of 23.15%, proving its ability to consistently outperform expectations.

2. Rising Sales and Earnings Growth

A key part of the strategy is finding firms with growing revenue and earnings. CPRX reports:

• Year-over-year revenue growth of 29.96%
• Quarter-over-quarter sales growth of 43.56%
• EPS growth of 136.84% compared to the same quarter last year
  These numbers point to strong demand for its products, including treatments for Lambert-Eaton myasthenic syndrome (LEMS) and epilepsy.

3. Improving Operating Margins and Cash Flow

Better profitability is crucial, as it shows efficient scaling. CPRX’s operating margin jumped by 127.3% over the past year, reflecting cost control alongside revenue growth. Free cash flow—a key measure of financial health—also rose 123.9% year-over-year, giving the company resources for further growth or strategic moves.

4. High Return on Equity (ROE)

Navellier prefers firms that deliver strong returns on shareholder equity. CPRX has an ROE of 24.85%, well above the industry average, showing effective use of capital.

Fundamental Strength Beyond the Screen

A closer look at CPRX’s fundamental analysis reveals more strengths:

• Profitability: Outstanding margins, including a 36.91% net profit margin and 43.27% operating margin, place it among the top biotech peers.
• Valuation: Despite fast growth, CPRX trades at a P/E of 14.15, below both the industry and S&P 500 averages.
• Balance Sheet: No debt and a current ratio of 6.14 highlight financial stability.

Conclusion

Catalyst Pharmaceuticals displays the qualities Navellier looks for: fast growth, improving profitability, and steady earnings outperformance. While the screen highlights such candidates, further research—including pipeline updates and market trends—is important.

For investors searching for similar opportunities, the full Little Book strategy screen provides more high-growth stocks.

Disclaimer: This analysis is not investment advice. Conduct your own research or consult a financial advisor before making decisions.