UNITED THERAPEUTICS CORP (NASDAQ:UTHR) - A Strong Candidate for GARP Investors

UNITED THERAPEUTICS CORP (NASDAQ:UTHR) stands out as a compelling pick for investors seeking growth at a reasonable price (GARP). The company, a biotechnology firm focused on treatments for pulmonary arterial hypertension and other chronic conditions, meets key criteria outlined in Peter Lynch’s investment strategy. With solid profitability, strong financial health, and an attractive valuation, UTHR presents a balanced opportunity for long-term investors.

Why UTHR Fits the GARP Approach

• Sustainable Growth: UTHR has delivered a 5-year average EPS growth of 16.88%, aligning with Lynch’s preference for steady but not excessive growth. Future EPS growth is projected at 18.63%, indicating continued momentum.
• Reasonable Valuation: The stock trades at a PEG ratio of 0.73 (based on past 5-year growth), well below the preferred threshold of 1, suggesting it is undervalued relative to its growth potential.
• Strong Profitability: With a return on equity (ROE) of 17.79% and industry-leading profit margins (40.44%), UTHR demonstrates efficient use of capital and pricing power.
• Financial Health: The company carries no debt, a rare strength in the biotech sector, and maintains a high current ratio of 5.46, ensuring ample liquidity.

Fundamental Highlights

UTHR earns a strong fundamental rating of 7 out of 10, excelling in profitability and financial health while offering a cheap valuation relative to peers. Key takeaways:

• Profitability: Top-tier margins (operating margin of 49.25%) and high returns on equity and invested capital.
• Valuation: P/E of 12.28 is significantly lower than industry averages, and forward P/E of 10.60 reinforces its appeal.
• Growth Stability: Revenue has grown at 14.71% annually over the past 5 years, with earnings growth expected to remain robust.

For a deeper dive, review the full fundamental analysis of UTHR.

Our Peter Lynch Strategy screener lists more stocks matching these criteria and is updated regularly.

Disclaimer

This is not investing advice. The observations here are based on data available at the time of writing. Always conduct your own research before making investment decisions.