Providing an improved customer experience is propelling this health and wellness business to new heights.
- Cathie Wood's popular ARK Innovation ETF performed very well in 2020 and now has assets north of $22 billion.
- But the tech-focused fund has lagged tremendously behind a booming small-cap stock over the past year.
- The Joint Corp. is upending the chiropractic industry by focusing on low cost and convenience.
Cathie Wood has been in the spotlight ever since her firm's flagship fund, the ARK Innovation ETF (NYSEMKT:ARKK), soared 149% in 2020. Companies she invests in, like streaming platform Roku , fintech pioneer Square , and communication service Zoom , benefited greatly from the pandemic's impact on consumer behavior.
But there's one unstoppable stock that has outperformed the ARK Innovation ETF by a wide margin over the past 12 months, and it's a company I'm sure you haven't heard of before. You'll want to read on to find out more about this rapidly growing business .
No pain, no gain
With a market capitalization of $1.4 billion, The Joint Corp. (NASDAQ:JYNT) is a small-cap stock that has skyrocketed 419% over the past year. Unsurprisingly, a business this size flies under the radar, but its execution thus far warrants a lot more attention.
JYNT data by YCharts.
The Joint Corp. is a franchisor and operator of low-cost, private-pay (no insurance needed) chiropractic clinics in the U.S. As of June 30, there were 633 locations nationwide, with 282 under development. Annual spending on back pain averages $90 billion, so The Joint Corp.'s 2020 systemwide sales of $260 million leaves a massive untapped growth opportunity.
The value proposition for patients is strikingly clear. For an average of $29, customers receive a basic spinal adjustment performed by a licensed chiropractor, all without needing to schedule an appointment. The business treated 1.1 million unique patients in 2020, up 10% from the prior year. And supporting The Joint Corp.'s mission to make chiropractic care more convenient is the fact that 50% of Americans don't even know what the word "chiropractic" means.
The industry is dominated by some 40,000 independent chiropractic offices that generate 97% of the total market's revenue. The Joint Corp. currently owns a tiny 1% market share, but management has huge ambitions. By the end of 2023, it expects to have 1,000 clinics open. And even more exciting is the long-term potential of 1,800 locations just in the U.S. That would be nearly triple the store count today.
The stock currently trades at a steep forward price-to-earnings ratio of 240, so I suggest waiting for any pullback before you decide to buy shares.
Image source: Getty Images.
You can beat the pros
While it might be tempting to imitate the investing decisions of those you hear about or see on the news, this isn't always the best idea. For starters, if you haven't done the research on the specific stock yourself, you're less likely to be able to hold on for the long term. This is especially important during the inevitable ups and downs, when you'll need conviction to stick with your plan.
The Joint Corp. can teach us an important lesson, and that is that individual investors can beat the experts. Compared to large institutions with billions of dollars under management, retail investors are able to buy shares in much smaller businesses. Not only that, but you also could've discovered The Joint Corp. as a customer, just like I did.
Part of being a good investor is being genuinely curious about the world around you. If you see new and unfamiliar businesses in your daily life that pique your interest, there's a possibility that they could be publicly traded. And this ground-level research gives you first-hand access to potentially lucrative investment ideas, something that can provide an edge over people like Cathie Wood.
Keep this mentality as you grow your skills and become a better and more experienced investor. You just might find another outstanding stock like The Joint Corp.
Should you invest $1,000 in The Joint Corp. right now?
Before you consider The Joint Corp., you'll want to hear this.
Our award-winning analyst team just revealed what they believe are the 10 best stocks for investors to buy right now... and The Joint Corp. wasn't one of them.
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*Stock Advisor returns as of September 17, 2021
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Roku, Square, and Zoom Video Communications. The Motley Fool has a disclosure policy.