RX is a small-cap pharmaceutical company with a market cap of $130M. RX possesses a portfolio of healthcare products that has produced solid cash flow over the years. The company has a record of strong organic growth; RX’s topline growth over the last five years averaged around 11% without any meaningful acquisitions. RX has a strong balance sheet, with a net cash position of approximately $20M. The company has been repurchasing shares and raising dividends at a healthy pace over the past few years. RX is trading at 14.6x Forward P/E, which is a fair valuation for a company expected to grow organically by 7%–8% over the next few years. We view RX as a fairly attractive for some growth and some income. But as a small cap with only one analyst, it is hard for the company to get a lot of attention. We would also consider it higher risk due to its size.
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