You’ve seen the headlines. At least once a month, there’s news of a medical breakthrough that promises to extend the lives of terminally ill cancer patients, reduce suffering for people with serious illnesses or improve recovery times for folks who have surgery.

#-ad_banner-#The miracles of medical science have become so commonplace that we take them for granted. These enormous advances have extended average lifespans and made centenarians commonplace. In fact, some people live well beyond 100: I just read that exactly one person born in the 19th century is still alive. (Think of the stories she could tell, or the stocks she could have bought and held since then!)

Medical miracles aren’t the only phenomenon we take for granted when it comes to healthcare. Even though most investors are familiar with the “aging of America” theme — the Baby Boom generation’s slow and steady advancement into its golden years — the scope of it is easy to overlook. Let’s revisit the facts: by 2050, the population aged 65 or older will be an estimated 84 million, vs. 43.1 million in 2012. The population of Americans 85 or older will be an estimated 18 million by 2050, vs. 5.9 million in 2012. That’s a tremendous increase in the markets for healthcare products and services.

With that in mind, smart investors regularly update their lists of healthcare stocks poised to take advantage of this unstoppable trend, and keep an eye on their price moves. When opportunities emerge to add shares of long-term growers at reasonable or bargain prices, they act. And today, I see one such stock selling at a bargain price relative to its growth rate.

Regeneron Pharmaceuticals (Nasdaq: REGN) is a biotechnology company that focuses on new ways to fight cancer and other diseases. Its specialty is genetics-driven drug discovery, a cutting-edge field that builds on the DNA sequencing advances to find new ways to prevent or treat diseases.

Regeneron has developed two different platforms for generating new drugs. One is the VelociGene technology, which give scientists a quick way to eliminate or modify a single gene in a mouse to test the impact of specific proteins. This type of specific targeting allows researchers to find a gene’s function and test potential treatments much quicker than in the past. Regeneron also can use genetically modified mice to produce fully human antibodies — which can specifically bind to therapeutic targets inside human patients with much less chance of immune response that can occur with antibodies that aren’t 100% human.

Regeneron has a deal with Sanofi through which some of the pharma giant’s drugs are developed using VelociGene technology; in return, Sanofi helps fund and collaborates with Regeneron’s own drug development.

The company’s other drug-development platform is known as Regeneron Trap technology. Essentially, these proteins fool the body by trapping molecules that signal receptor cells to produce harmful effects, such as cancer or inflammation. By blocking the communication to the receptor cells, the disease is prevented or slowed. 

Regeneron stock is up almost 3,000% in the past decade, thanks to excitement about the potential for a slew of blockbuster drugs deriving from Regeneron’s technologies and expertise. Investor enthusiasm was fueled by the success of the first drug that made it to market: Eylea, a treatment for age-related macular degeneration. The drug may hit $3 billion in U.S. sales this year; it is preferred over competing treatments because it requires an injection only every other month rather than every month. Next in the pipeline is a cholesterol-reducing drug, Praluent; a rheumatoid arthritis treatment known as sarilumab; and Dupilumab, a treatment for eczema being developed in conjunction with Sanofi. Analysts are especially excited about the prospects for Dupilumab, because the eczema market is large and underserved — and because the drug could eventually be approved for other inflammatory diseases as well.

Regeneron’s sales and earnings are already soaring, thanks in large part to Eylea, as well as three other drugs on the market. Revenue rose nearly 50% in 2015 and earnings per share jumped 85%. The stock currently trades at 62 times analysts’ consensus estimate for 2016 earnings per share and 48 times the estimate for 2017. Given that earnings could grow 40% to 50% on average over the next three to four years, this is a reasonable multiple. Note that the stock briefly traded above $605 last August before suffering a selloff with other biotechs in the second half of last year. Barron’s magazine recently devoted a cover story to Regeneron, and other observers have identified it as a fast grower whose shares seem underpriced. It’s not too late to get in, but pretty soon it might be.

Risks To Consider: Even Regeneron’s share price is attractively valued relative to growth, it is a nominally expensive stock that could take a steep fall if future earnings projections are lowered by analysts or the company itself. The company also could be vulnerable to bad news from the FCC.
    
Action To Take: Buy Regeneron Pharmaceuticals below $400.

P.S. A new life-saving cancer “miracle drug”… Google’s shocking next business venture… a surprising new wearable tech likely to outsell the Apple Watch 3-to-1. Click here to get all 10 of our shocking predictions for 2016, and the game-changing companies making them a reality, in this brand new report — absolutely free.