The Nanosonics share price is up 127% in 2019

The Nanosonics Ltd (ASX:NAN) share price has been on fire this year. Is it too late to invest?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One of the best performers on the S&P/ASX 200 index this year has been the Nanosonics Ltd (ASX: NAN) share price.

The infection control and decontamination products company's shares have rocketed an incredible 127% higher since the start of the year.

This makes it the fourth-best performer on the benchmark index behind Pro Medicus Limited (ASX: PME), Afterpay Touch Group Ltd (ASX: APT), and Fortescue Metals Group Limited (ASX: FMG).

Why is the Nanosonics share price up 127% this year?

Investors have been scrambling to get hold of the company's shares this year following the release of a strong half year result in February and an even stronger full year result in August.

In respect to the latter, last month Nanosonics posted record full year sales of $84.3 million and a record operating profit before tax of $16.8 million. This was a 39% and 120% increase, respectively, on the prior corresponding period.

This was driven by a combination of strong growth in both Capital revenue and Consumable and Service revenue.

Solid demand for its trophon EPR ultrasound disinfection system led to Capital revenue increasing 28% to $32.8 million in FY 2019. Over the 12 months the company's global installed base reached 20,930 units, which was an 18% increase year on year.

Whereas, Consumables and Service revenue jumped an impressive 47% to $51.5 million. This was driven largely by the increase in its global installed base. This is because the more disinfection systems that the company sells, the greater its Consumables and Service revenue becomes as the systems require these specific consumable products in order to operate.

Also getting investors excited was management confirming that the first of its secretive new products is on schedule to be released by the end of FY 2020, pending regulatory approval. Little is known of these new products other than they are targeting unmet needs in the same industry.

But if they are half as successful as its ultrasound disinfection system, then they could support solid sales and earnings growth for a long time to come.

Should you invest?

Whilst Nanosonics' shares are undoubtedly expensive and high risk due to the significant amount of future growth that has been built into them, I still believe they could provide outsized returns for investors over the next decade thanks to the trophon product's strong growth potential and the release of these new products.

Though, it is worth noting that due to the premium they trade on, they may only be suitable for investors with a high tolerance for risk.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and Nanosonics Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool Australia has recommended Nanosonics Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

A man looking at his laptop and thinking.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a disappointing hump day session for the ASX today.

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX managed to bank a small rise this Tuesday.

Read more »

Sport trainer talking to little girl who is climbing wooden ladder in gym.
Share Gainers

Why Vault Minerals, Droneshield, Westgold Resources shares are climbing higher today

These shares are gaining on Tuesday, but why?

Read more »

A young woman smiles as she rides a zip line high above the trees.
Financial Shares

5 best ASX 200 financial shares of FY25 (CBA didn't make the cut!)

These stocks were well and truly 'in the black' for share price growth last financial year.

Read more »

Excited group of friends sitting on sofa watching sports on TV and celebrating.
Share Gainers

Why Amaero, Black Cat, Domino's, and Ramelius shares are racing higher today

These shares are having a good session on Tuesday. But why?

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a rough start to the trading week for investors this Monday.

Read more »

two computer geeks sit across from each other with their laptop computers touching as they look confused and confounded by what they are seeing on their screens.
Share Gainers

ASX tech shares outperformed US tech stocks by 2:1 in FY25. Here's why

Forget the Magnificent 7! Aussie tech shares had twice as much price growth as US tech stocks in FY25.

Read more »

Three happy office workers cheer as they read about good financial news on a laptop.
Share Gainers

Why Bellevue Gold, Cobram, Hub24, and Nanosonics shares are pushing higher

These shares are starting the week on a positive note. But why?

Read more »