ALGN, what a wonderful find

I don’t know who to thank for bringing Align Technology (ALGN) to the board’s attention. I only got to research it this morning after reading strelna’s post.

strelna sold on valution concerns. The Klein chart concurs:

redsox2005 has some very keen comments:

I’ve been interested in buying for the last couple of months and haven’t pulled the trigger - yet. What is very interesting is that they only have roughly 6% penetration of the teenage market and doctors are now more than 12 months ago to use their procedure as they are more comfortable with it. High valuation - yep; own the market; yep; disruptive - I think so; faster than traditional - yep. I am waiting for the next earnings release to make the decision as I view this as a very long term play.

Market penetration is a key metric metric in the growth story. My guide is that the curve in the hockey stick is put in at around 15% industry wide market penetration. Maybe 6% is too early.

The bear case for Align Technology cites many patents expiring soon which will allow more competitors to enter the market. Align has not been resting on its laurels, they have lots of new patents in their pipeline. Link courtesy a Fool walled board:

But patents by themselves don’t make a sufficient moat. On the other hand, being “the market leader” makes a huge difference in creating the network effect to keep them in that position. Colgate toothpaste is a good example. How difficult is it to make toothpaste? What then keeps Colgate toothpaste as the market leader year after year besides being the market leader? One reason is “positioning.” The human mind does not store all the information it collects. Marketers have found that we have a ladder that allows us to recall maybe two or three names in each category. The test is asking who was the second flier to cross the Atlantic non-stop. Most people, including myself, are stumped! More mundane reasons for keeping the leadership position are “if it ain’t broke, don’t fix it” and “you can’t lose your job buying IBM” (back when it was still true).

The above creates a conundrum: is ALGN overbought (valuation issues) or is ALGN painting the curve in the hockey stick (opportunity)? One safe way to approach the conundrum is to buy a tiny starter position for the purpose of staying focused on the stock. I’ve added ALGN to my wish-list.

My portfolio is heavily health oriented: one drug stock, one medical equipment stock, one food and animal safety stock, one food additives stock, and on the wish list one housekeeping and food preparation stock. While all are health oriented they are quite well diversified. What I find interesting is that these health stocks are among the long term fastest growing stocks I could find*. High tech has some much faster growers but with short histories because there is a lot of creative destruction in that fast developing industry. My participation in high tech is limited to four ETFs.

But what is the point I’m making? That in an affluent but aging society healthcare is a major industry because people can afford to try to stay healthy and alive. And people can afford to make themselves look their best with straight teeth. As a kid I too wore braces, my dad could afford them.

Denny Schlesinger

  • I also own one health destroying company, Monster Beverage Corporation (MNST) which is growing even faster than the health promoting stocks, an incredible 35% over 20 years!

and it’s no fluke, a competitor, National Beverage Corp. (FIZZ), is not far behind. It was mentioned in the comments section of a SeekingAlpha article about MNST


I certainly feel I have missed the boat on this one. It could still be a great investment, but I don’t understand the company and domain enough. My biggest worry basically is can a much lower priced treatment come and undercut Align ?

I had come across this a few days back.…

Healthy, well-aligned teeth shouldn’t just be for the wealthy. Candid, a direct-to-consumer teeth alignment company, aims to make straight teeth more accessible and more affordable than braces and Invisalign.

Candid, which 3D prints its FDA-approved aligners, is designed for people who need mild to moderate orthodontic work. It costs $1,900 upfront or $88 per month over two years, while braces can cost up to $7,000 and Invisalign can cost up to $8,000.

I have not spent much time digging in the claims, nor I am the best to give advice in dental space.
Thoughts, comments welcome.

My biggest worry basically is can a much lower priced treatment come and undercut Align ?

That possibility always exists.

I had come across this a few days back… Candid

Great find! If it works…

I tried to get information about the company. I could not find any with Google nor at their website:

They did a novice’s error, the name ‘Candid’ is being used by various outfits that do various things. At some point they’ll have to change the name to something more distinctive. How will they get the product to market if they are cutting out the middleman, the orthodontist? If there is no doctor involved, can it be covered by health insurance? A more reasonable approach and bigger threat would be a dental clinic or a brand like Colgate or Oral-B offering the service.

I’m not saying they can’t succeed but at this stage I would not consider them a threat. I would not let such a long shot stop an investment in ALGN if ALGN seems warranted on its own.

Denny Schlesinger


What you should know about tooth-straightening aligners from NY Daily News.

Interesting perspective from a dentist re: Candid and other do it from home mold kits. He suggests getting an initial consultation from a dentist and depending on how much re-alignment you need, you may or may not be a candidate for the Candid approach.

He compares Candid approach to braces to the 1-800 Contacts business for contact lenses.

Starts to sound to me like test driving/kicking the tires with electronics at Best Buy and then purchasing online from whoever’s cheapest…except it’s your mouth.

He goes on to say that in 95% of cases, 60-80 new trays are required to do it right with Invisaline, but that Candid limits their patients to 20 trays.

"…However, fancying myself as a Midwestern pragmatist who truly cares for people and wants what’s best for them, I need to brand direct-to-consumer treatment as a “buyer beware” product. This technology has improved and will continue to improve.

However, in its current form, expect improvements in your current tooth position but not the “amazing smile” you may covet. Companies will limit the aligners they ship you to 20 (clear trays which are white labeled by Invisalign or other aligner companies).

I am a “top 1 percent” provider of Invisalign and am pretty darned experienced with clear aligner treatment, but 95% or more of our in-office aligner treatments require more than 20 trays. Most average in the 60-80 tray range.

If better is better than nothing, these products are worth a look. If you have noticeably crooked or spaced teeth, and seek perfection — or anywhere close — you are best to contact your local orthodontist and consider comprehensive products like braces or Invisalign.

Most orthodontists offer free consultations, so if you are considering any orthodontic treatment it is worth your time to be diagnosed by a professional and have all options presented so you can make a wise decision and get that amazing smile you always dreamed of."…