Harmony Biosciences Holdings (NASDAQ:HRMY): A Prime Affordable Growth Stock with Strong Fundamentals

Investors looking for growth opportunities without paying too much often use the "Affordable Growth" strategy, which focuses on companies with strong growth potential and reasonable prices. This method combines the appeal of high-growth stocks with the careful approach of value investing, helping to avoid overpriced options. Harmony Biosciences Holdings (NASDAQ:HRMY) recently appeared in such a search, scoring well on growth and valuation measures while also showing good profitability and financial health, key factors for long-term success.

Growth: A Key Factor

Harmony Biosciences stands out with a Growth rating of 8/10, showing strong past and expected performance. Key points from its fundamental analysis report include:

• Earnings Per Share (EPS) growth of 49.76% over the last year, with a five-year average annual growth rate of 44.61%.
• Revenue growth of 17.74% year-over-year, rising to a 160.13% annual rate when measured over several years.
• Analysts predict EPS to grow 35.76% yearly and revenue to increase by 18.23% in the future, indicating continued progress.

For Affordable Growth investors, these numbers matter: they show the company is growing effectively without relying only on uncertain future promises.

Valuation: Attractive Numbers

Despite its growth, Harmony Biosciences trades at a Valuation rating of 9/10, meaning it remains fairly priced:

• A P/E ratio of 11.44 is much lower than the industry average of 20.84 and the S&P 500’s 26.73, suggesting it may be undervalued compared to others.
• Its forward P/E of 8.18 highlights this gap, trading cheaper than 87% of pharmaceutical industry peers.
• The Enterprise Value/EBITDA and Price/Free Cash Flow ratios also rank among the best in the sector.

This mix of low prices and high growth potential fits the Affordable Growth strategy’s aim of finding companies where future earnings aren’t fully reflected in the price.

Profitability and Health: Building Stability

Affordable Growth searches look for companies with strong basics to reduce risk. Harmony Biosciences performs well here too:

• Profitability (8/10): The company has a 23.42% net margin and 28.72% operating margin, better than 94% of pharmaceutical peers. Its Return on Invested Capital (17.95%) shows efficient use of capital.
• Financial Health (8/10): With a Debt-to-Equity ratio of 0.20 and Altman-Z score of 5.60, the balance sheet indicates low risk of financial trouble. Measures like a Current Ratio of 3.84 add to its strength.

These details are important for the strategy—they ensure the company can fund its growth and handle economic challenges without too much debt.

Conclusion

Harmony Biosciences fits the Affordable Growth model: it combines high growth rates with reasonable prices, backed by profitability and financial strength. For investors, this lowers the chance of overpaying for growth while offering potential gains as earnings rise.

To find more stocks like this, try the Affordable Growth screen, which filters for similar balanced opportunities.

Disclaimer: This article is not investment advice. Do your own research or talk to a financial advisor before making investment decisions.