Omnipod maker Insulet reported a robust earnings report in early August. The insulin pump stock has been on the move ever since.
Wednesday's pick for IBD 50 Growth Stocks To Watch is trying to extend a four-day win streak and sits in a buy zone. Insulet is tapping into a new market of more than 38 million people who may be potential users of its medical device.
The IBD 50 stock meets the stringent criteria to be on the IBD Sector Leaders list and it was Tuesday's IBD Stock Of The Day. Insulet stock was also discussed on Wednesday's episode of "IBD Live."
Insulet makes Omnipod insulin pumps for people with diabetes. The product is sold in 25 countries and has more than 500,000 users.
Insulet's device serves customers with type 1 diabetes. The company is expanding its use to people with type 2 diabetes. As of 2021, the Centers for Disease Control and Prevention estimated that 1.7 million people age 20 and older in the U.S. have type 1 diabetes. That compares with more than 38 million Americans with type 2 diabetes, although not all of those patients will need insulin treatment.
The wearable system is tubeless and requires no daily injections. It can be combined with continuous glucose monitors.
Insulet's Omnipod 5 app provides pump wearers with insulin delivery data and blood glucose levels. The app is fully compatible with Apple iPhones and Android smartphones and uses a DexCom sensor to gather data.
Insulet stock ranks No. 1 out of 125 stocks in IBD's Medical-Products group, which holds the 136th spot out of the 197 industry groups that Investor's Business Daily tracks.
The stock holds an SMR Rating of A, meaning it is in the top 20% of stocks in terms of sales growth, profit margins and return on equity. Its 24% ROE is above the desired 17% that IBD seeks.
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Insulet Stock Sits In A Buy Zone
Insulet stock gapped up more than 9% in heavy volume on Aug. 7 and retook its 50-day moving average. The move came after the Omnipod maker reported second-quarter earnings and sales that handily beat estimates.
Shares broke out of an early-stage, skewed cup-with-handle base with a 322.80 buy point Monday. Insulet is in the 5% buy zone that extends to 338.94, according to MarketSurge pattern recognition.
The stock's relative strength line is back on the rise after falling to a low in early August.
Mutual funds own a hardy 70% of shares and have added Insulet stock for five straight quarters, according to IBD Stock Checkup.
Omnipod Maker Sees 113% EPS Growth, Raises Guidance
Insulet has a quality that IBD seeks. The company had accelerated earnings over the last two quarters and rising sales growth over the last three quarters.
Its second-quarter profit grew to $1.17 per share, or a healthy 113%, which followed a 67% jump in the first quarter.
The insulin pump maker's revenue growth ramped up to 33% in the second quarter, from 17% and 29% in the respective previous two quarters. Insulet expects third-quarter revenue growth in the range of 22%-25%. It also raised its full-year sales growth guidance to 24%-27%.
Wall Street forecasts show profit growth slowing to 27%, then to an average of 16% over the following three quarters.
Analysts call for third-quarter revenue to climb 25% followed by two quarters of 22% increases.
Its annual profit growth ranged from 110% to 400% from 2021 through 2023, with 2024 rising a more modest 19%. Full-year 2025 earnings estimates now show 43% growth then 25% in 2026.
Its robust profit growth earned Insulet a best-possible 99 Earnings Per Share Rating from IBD. The stock holds a strong 97 Composite Rating.
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