InVentive is a way to invest indirectly in the drug industry, and is the first health care name in two years to attract guru attention.
It meets enough of the Peter Lynch strategy's criteria to be labeled a 'fast grower.'
The James P. O'Shaughnessy strategy likes inVentiv's price.
Position: None
I've been writing this column for more than two years, and I've rarely had the opportunity to write about companies in the health care industry. It's not that I think such companies are sickly, it's just that they don't usually pass muster with at least two of the guru strategies I use when analyzing stocks. (I generally don't write about a stock unless at least two strategies give it a grade of 90% or better.)
That's why, when I did a screen of stocks and found a health care company that got very strong recommendations from two strategies, I jumped at the chance to write about it. The company in question is inVentiv Health (VTIV - commentary - Cramer's Take), a relatively new name on the scene. Ventiv Health added the "in" after its recent acquisition of InChord.
InVentiv provides outsourcing services to the pharmaceutical industry. These services include helping to staff and run clinical trials, advertising and marketing services used to build brands, pharmaceutical sales forces, market research and analytics, and more. Small to mid-sized companies use inVentiv because they do not want to incur the overhead costs of having their own sales force or don't have the expertise to gain Food and Drug Administration approval. Larger companies use outsourcers like inVentiv to hold down overhead expenses and provide flexibility as the number of products in the approval process and being marketed varies over time. According to the company, it has 175 pharmaceutical, biotech and other companies as customers.
InVentiv has been growing by expanding its business as well as through acquisitions. The purchase of InChord, a health care marketing and advertising network, in October 2005, is an example. Another occurred in March 2006, when inVentiv bought Adheris, which provides patient-education programs.
InVentiv's stock trades around $30, but the strategies of Peter Lynch and James P. O'Shaughnessy signal that there's promise of more here.
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At the time of publication, Reese did not have a position in the stock mentioned, although holdings can change at any time.John P. Reese is founder and CEO of Validea.com, an investment research firm, and Validea Capital Management, an asset management firm serving affluent investors and companies. He is also co-author of the best selling book, The Market Gurus: Stock Investing Strategies You Can Use From Wall Street's Best. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Reese appreciates your feedback. Click here to send him an email.
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