HQY - HealthEquity: Strong Growth And Healthy Cash Flows Changed My Mind

2024-05-29 07:30:34 ET

Summary

• Value investors often overlook growth opportunities, potentially missing out on upside, such as has been the case with HealthEquity.
• The firm has experienced rapid growth in revenue and cash flows, leading to a significant increase in stock price.
• The company's strong growth and positive financial outlook suggest potential upside, leading to an upgrade to a soft 'buy' rating.

One of the biggest risks to value investors is underappreciating growth opportunities. We become so fixated on the price that we pay for a company that we heavily discount how much value future growth could have on a firm. While this doesn't necessarily cause us to lose money, it can cause us to miss out on upside. A great example that I can point to in my own work involves HealthEquity ( HQY ), a firm that operates as a provider of HSAs (health savings accounts) and other types CDBs (consumer directed benefits)....

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