David Westenberg, CFA, is a Senior Vice President and Senior Equity Analyst at C.L. King & Associates. Mr. Westenberg joined the company in January 2016 with seven-plus years of investment industry experience, most recently at Canaccord Genuity, where he was an Equity Research Associate covering 20 companies in the animal health and diagnostics industries. In this exclusive interview with Mr. Westenberg, he discusses the basics of investing in this exciting new industry.
He has a number of top picks in the sector but is cautious for new entrants. “Because of the valuations, there are no screaming buys in my space at all. You can do some stock picking. In terms of where we are in the economic cycle, I am tending to favor the companies that are just really good business models. These valuations are steep, but if investors have a long holding period of time, these will play out.”
Molecular diagnostics is creating a mega-trend in medical investments. One of his top picks is Illumina (NASD:ILMN). “When you are looking at Illumina, it has 80% to 90% market share, but its market backdrop is outstanding, and genomics itself is a multi-decade megatrend. Sequencing right now is growing at 15%-plus, and it is almost impossible to rip out an Illumina instrument once it has been placed into a laboratory, particularly on the clinical side because the reality is that somebody has to revalidate an instrument. In this particular market, you rarely get companies like this at a very good price. And investors know that, which means it’s multiple I think is safer relative to its peers. Maybe two to three years down the line, the entire market pulls back and the stock is at the same price, but you just buy more. You’ll be happy you’ve followed the story during that pullback.”
For more of Mr. Westenberg’s investment picks and his detailed analysis supporting them, read the entire interview at the Wall Street Transcript.