This Small-Cap Stock Is Making Life Better for 3 Million Aging Americans

You already know that aging demographics are driving up demand for healthcare services globally. And that trend isn't going to reverse anytime soon.

According to an April 2018 article in Forbes, the global population of people aged 60 years or more is expected to jump from 900 million in 2015 to 1.5 billion in 2030.

That growth in the elderly population is a big reason why one out of every seven jobs created in the United States is in the healthcare sector.

But while it might seem grim to think of record numbers of people in hospitals or hooked up to medical equipment, our small-cap stock pick today specializes in solutions to keep people out of hospitals and as mobile as they want to be.

That's why the technology this company developed has more than doubled its market penetration since 2012.

This is a company that's growing sales by a 44% compound annual growth rate (CAGR), and its 2019 operating profits are projected to be 185% higher than they were four years ago.

But in spite of its success and long-term growth prospects, a recent earnings miss and lowered guidance triggered a massive overreaction. The stock price is now an extraordinary 75% below its 52-week high.

That's an opportunity for us to pick up the value Wall Street left on the table.

To confirm that this stock is ready to bounce back in a big way, it just got a top score from our Money Morning Stock VQScore™ system.

That shows us this is one of the best deals available on the market today.

This Company Began with One Customer in Mind - Now It Serves 50,000 a Year

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Inogen Inc. (NASDAQ: INGN) started in 2001 as a family project with a singular goal: to improve the quality of life of a grandmother named Mae.

Mae had been diagnosed with chronic obstructive pulmonary disease (COPD), an incurable illness that affects 3 million Americans every year. As a result, she needed consistent oxygen therapy.

All the available options at the time severely restricted Mae's mobility. Traveling was a nightmare. Every excursion out of the house meant lugging around extra oxygen bottles, and switching them out was a pain.

Three years after starting the company, the founders presented Mae with the first Inogen One oxygen concentrator. It was an instant success.

Inogen One products are lightweight - between three and six pounds when full - and can be carried on a strap like a purse. Depending on the model, they can run for five to 13 hours at a time, making it easy for users to leave the house as they please and live their lives.

The current portable models even meet FAA standards, so users are free to travel across the country to visit family or enjoy a vacation.

This is more than just a matter of convenience. According to a 2000 study by Dr. Tom Petty, oxygen therapy patients who are ambulatory have double the survival rate of those who don't.

The benefits go far beyond mere survival, though. Patients who stay ambulatory spend 60% fewer days in the hospital. Each one of those hospital days is equivalent to the cost of an entire year of Inogen oxygen therapy.

Inogen's portable oxygen concentrator has received a Frost & Sullivan Oxygen Therapy Product of the Year award, a Medical Design Excellence Award, and a Design of the Decade award from the Industrial Designers Society of America.

Market share for portable oxygen concentrators has climbed from 5% in 2012 to 11% in 2017. And Inogen estimates that it will reach full penetration - about 65% - in the next five years or so.

That's why the market panic over minor disappointments in earnings and guidance is overblown.

The company's long-term prospects are still fantastic, especially since the Inogen One G5 came out in April. This new model lasts more than twice as long as the previous one, with twice the maximum airflow, and still sells for a very reasonable price.

So as more and more baby boomers suffer from COPD every year, Inogen is producing the products they must have to live a long, enjoyable life.

That makes Inogen a must-have stock.

Now Is the Time to Buy INGN

It's arguable that INGN was overvalued at $280, where it was in September. But at $72, where it is now, it's an outright steal.

Even Wall Street has caught on to this overcorrection. Five out of seven analysts tracking the stock call it a "Buy." And JP McKim at Piper Jaffray has set a price target at $140, 92% higher than the current price.

That's because this is a company that has increased sales every year since 2011, including by 43.6% in 2018. While the stock price was falling in 2018, net income rose 146.9% to $51.9 million. And according to FactSet, EPS is projected to rise 77.9% between 2019 and 2022.

Thanks to the market's overreaction, Inogen's enterprise value to sales ratio has fallen to more than 30% below the industry average.

In other words, INGN gives you short-term value and long-term growth wrapped up in one can't-miss stock.

And if you're looking for more ways to profit, we've got you covered...

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About the Author

Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.

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