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My Top Small-Cap Pick for a Strong Year-End Run - RealMoney

On Tuesday, I discussed Uber (UBER) , which is my top large-cap pick for a strong year-end run. Today, I want to discuss my top small-cap pick for a strong year-end run.

My pick is LifeMD (LFMD) . LifeMD has a market cap of around $168 million with about 36 million shares outstanding. The daily average volume is less than 500,000 shares. Tc Oil Seal

My Top Small-Cap Pick for a Strong Year-End Run - RealMoney

The company operates in two areas. The first is a physician tele-health network that offers tele-medicine, laboratory, and pharmacy services, focusing on primary care, men's health, women's health, allergy and asthma, and dermatology. It accounted for $83 million in revenues in 2022. The other division is the WorkSimpli, which provides workplace and document software-as-a-service products. It had revenues of $36 million in 2022, and management is guiding it to $53 million in 2023.

There is good growth in these two divisions, but what is most intriguing about the company is that it is a play on newly developed weight loss drugs like Wegovy and Ozempic. This GLP-1 class of drugs has made Lilly (LLY) and Novo Nordisk (NVO) into a juggernaut. Newer versions of the drugs are coming, and there is tremendous demand for them.

In April 2023, LFMD introduced a weight loss management tele-health program that charges a fee of $129 per month and provides prescription access to these medications. It has partnered with companies like Nutrisystem and Medifast. Growth has been very rapid, and the company is targeting 400 new customer signups per day by the end of the year. The traditional focus on weight loss for the new year should be a major catalyst for the business.

On the last conference call, the CEO stated: "We believe this comprehensive approach to weight management, including GLP-1 medications for medically qualified individuals, could be a catalyst for significant growth and enhanced profitability. It also is the primary reason for raising 2023 revenue guidance." The company raised 2023 guidance to $146 million - $152 million from $140 million -$150 million.

The company is now cash flow positive. Four analysts have buy ratings on the stock with an average price target of $7.50 versus the current price of around $4.62.

Technically the chart is developing very well as it consolidates in $4.25 to $4.75 area. Once the story is better know, momentum buyers will likely chase the stock as it moves through the $5 level.

(Please note that due to factors including low market capitalization and/or insufficient public float, we consider this stock to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.)

At the time of publication, DePorre was long LFMD.

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My Top Small-Cap Pick for a Strong Year-End Run - RealMoney

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