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Is BNGO Stock a Solid Long Term Investment?

Stock Market

The very idea that you might be able to purchase long-term stocks in order to enhance the overall performance of your portfolio is an appealing one, to say the least. It's also a technique that many investors use quite effectively. The key is to find stock that can be purchased without spending loads of cash right now, all in the hopes of selling the stock at a later date for much more than you spent in order to purchase it. More often than not, this involves finding stock that is available for sale for relatively little, especially if there is strong evidence that the stock in question can enhance its performance in the stock market at some point in the future. Sometimes people hold on to these long-term investments for a year and sometimes they hold on to them for five years. A lot of it depends on personal preference and how patient you can be when you're talking about long-term investments. One company that has started coming up on the radar quite a bit when talking about these types of investments is Bionano Genomics, traded publicly on the stock market as BNGO. The question is, is this a solid option or is it one that will give you nothing more than a headache?

The Company

The first thing that any good investor should do before deciding to invest in any type of stock is to gather as much information about the company as possible. In this particular case, you already know that they are a biological research company that deals with the human genome, something that puts them in a medical category but also places them squarely within the sites of some of the most advanced tech companies out there. That fact alone means that they're in a relatively unique position, one that can sometimes serve them well in the stock market. Unfortunately, it can also mean that it's sometimes hard to perform well in this type of environment, largely because they may or may not have the financial foundation of some other companies that don't serve such a small part of the population. One thing that might provide investors with some solace as far as this particular company is concerned is that they were founded in 2003. Why is this important? It matters because it proves that they're capable of standing on their own two feet, not to mention the fact that they have the ability to weather a variety of storms that might otherwise spell doom for certain companies. Any company that is capable of surviving in this or any other market for almost 20 years is one that deserves a quick look, at the very least. It's also worth noting that this company has had the same CEO for the last 11 years. In short, there hasn't been a lot of volatility within the company, at least not as far as what can be seen on the surface. It's also worth noting that the current price for the stock is about as low as you can go (from a practical standpoint), as it is currently selling for a meager $1.94 on NASDAQ. That's something that is likely to both make you feel excited and concerned at the same time. If the company turns out to be a solid long-term investment, getting stock for only $1.94 per share is practically a steal. However, you're also probably asking yourself why the stock is selling for such a low price, especially if the company is a good investment option. That's precisely why it's time to look closer at this particular stock and see exactly what's going on.

Performance in the Stock Market

If you're concerned about the prospect of purchasing stock for $1.94 per share and making any appreciable level of money later on down the road from it, you have relatively good instincts. It's tempting to buy stock when it's selling for so little, because it wouldn't have to increase in value dramatically in order for you to make at least a little bit of cash. That being said, there is a reason that it's selling for such a small amount of money to begin with. As it turns out, this particular company has been underperforming in the stock market for some time, especially with regard to the last 12 months. That has caused a number of issues, not the least of which involves this particular company being rated at the very bottom of the barrel among companies of its type when its stock market value is considered. As a matter of fact, out of 249 different companies that operate in a similar industry that are currently traded on NASDAQ, this company has found itself competing at the lower echelon for some time. It's currently ranked 157th out of those 249 companies. That puts it in the bottom 37% when you consider its performance among similar companies that are currently being traded. That fact alone should be reason for concern. There has to be some reason why the company is constantly underperforming on the stock market. It's also worth noting that in today's trading, the stock is down. It's not down by a lot, but it is down by 1.03%. That fact alone isn't enough to get most people too terribly concerned, but when you couple it with some of the other issues such as the company's inability to compete at a higher level within the stock market, it's possible that you could start to see a pattern of under-performance. That's something that definitely requires further examination.

A Game of Percentages

It would be nice if the stock market was an environment where you could buy and sell shares in a fairly straightforward fashion without the need for loads of investigation or in some cases, more than a fair bit of guesswork in order to determine whether or not a particular stock is actually worth dealing with. Unfortunately, that's not typically the case. In fact, it's relatively rare that something stands out so strongly that you practically know that you can buy it as a long-term investment without losing any money. Part of the reason it’s so difficult is because things change so much within the stock market itself that something that looks like a solid long-term investment today might become very questionable within the next few months. By the same token, something that is performing poorly at the moment might start picking up unexpectedly. This particular stock is even more confusing because it has a tendency to look like it might be a good long-term investment if you look at certain percentages and then when you look at others, you practically want to run away from it as fast as you can. For example, it ranks better than 72% of the other stocks that are currently traded on NASDAQ if you only look at stocks that deal with research and diagnostics. However, it ranks in the bottom 37% when you look at stocks that fit into the bigger picture, as previously mentioned. This is enough to confuse anyone, even people that have been dealing with long-term investments for some time. On one hand, it looks like it might genuinely be a good option and on the other hand, there are all kinds of things wrong with it. If you're like most people, you're probably looking for some type of clarification right now. Consider these two facts. When you look at this particular stock in the broader sense and compare it with other medical companies that deal with some type of technical aspect, just as this particular company does, roughly 86% of those companies perform better on the stock market than this one does. That's a sobering fact, to say the least. It's also worth noting that the company has placed a target value on their stock to the tune of $12 per share. When you consider the fact that it's actually selling for less than $2 per share, you start to realize that things may not be going so well after all where this particular stock is concerned. In fact, the stock has fallen by more than 30% in the last month alone. That has to make anyone who is considering purchasing it as a long-term investment wonder whether or not they will ever see a return on their investment if they actually decide to purchase shares of the stock. At the moment, most analysts are actually recommending that anyone who currently holds the stock sell it now, while they can still get a little bit of money for it. That's definitely not the most reassuring thing to hear if you're thinking about purchasing it as a long-term investment.

To Buy or Not to Buy

At this point, you've probably made the decision that this isn't the best stock to purchase for a long-term investment. However, it's also entirely possible that you might be one of those individuals who needs a bit more proof in order to make a decision. That's especially true when you here some stock market analysts talking about how they feel that this company is going to become far more profitable in the relatively near future than it currently is, thanks in large part to the fact that it deals almost exclusively with genomic research that could potentially change the face of medicine sooner rather than later. In short, the company looks for certain genes that can signal potential health issues. If they're successful, then they might be able to definitively determine that someone who has a specific gene will develop cancer or heart disease. The thought process is that treatments can then be taken to directly target those genes in order to prevent these types of diseases from occurring in the first place. If they're successful, they stand to make loads of money from the research. The question is, will they be successful enough to stay afloat in a world that is increasingly competitive? That is the one thing that no one has been able to answer with any level of certainty thus far. In fact, it seems that even the stock market analysts who think that there might be something to this company don't necessarily recommend that you purchase it as a long-term investment right now. Instead, they have a tendency to recommend it as something that stays on your radar, but not something that you actually invest any money in at this particular point in time.

The Flip Side of the Coin

Just to play devil's advocate, there are a few stock market analysts out there who believe this would indeed be an ideal long-term investment, despite its current problems. The ones who do are betting on the science that's involved with the company. They think that the company is based on sound scientific principles. As such, they are firmly convinced that sooner or later, the company is going to come across something that will dramatically change the way that diseases are treated, thereby allowing the stock to go up exponentially. Of course, no one knows if this is likely to happen within the next year or the next five years. Truth be told, no one can determine with any level of accuracy whether or not it will ever happen.

At the end of the day, you probably have to ask yourself a personal question. Do you think that there is enough sound science behind this company in order for them to make the breakthroughs that they are attempting to make, thereby driving the price of their stock up? If you're a firm believer that the answer to that question is yes, then you might decide to purchase it as a long-term investment anyway, despite all of the potential red flags. On the other hand, you might arrive at a very different conclusion if you're a person that strictly looks at the information based on what you can see in the stock market right now. The thing that you genuinely need to understand is that if you decide to invest in this company, there is the potential that it could serve as a good long-term investment. However, there is just as good of a chance that it might not serve you well at all.

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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