The Misfits: ICON plc (ICLR)
The curious case of the #2 player in one of the best market-beating industries out there.
I continue to be amazed at how much alpha the sausage-makers of the healthcare industry produce. Or, more specifically, the fact that so many companies in this industry generate such spectacular returns while most individual investors care little for it bewilders me.
I know the answer to my bewilderment. Healthcare often ends in the “too hard” pile quickly (I have often been guilty of this); it isn’t nearly as exciting as the casino-like bets people make on startup drug companies; and they are one of those “ships and nuclear plant” industries (no one knows their names unless something went spectacularly wrong).
ICON plc (NASDAQ: ICLR) falls squarely into this category of market-winning stocks. Since going public in 1998, ICON has done so well that it’s one of those stock price charts that makes the S&P 500’s returns look like a flat line.
To be honest, I could have picked any one of ICONs peers because nearly all contract research organizations (CROs) have done spectacularly over the years. I wanted to focus on ICON specifically because it helps answer a challenging question: Can a business with a solid track record of small M&A deals pull of a large one and not destroy value?
Let’s dig in.
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