Ricardo Pillai

Sat, Jun 21, 2025, 6:44 AM3 min read

We came across a bullish thesis on Align Technology, Inc. (ALGN) on DIY Investor’s Substack. In this article, we will summarize the bulls’ thesis on ALGN. Align Technology, Inc. (ALGN)'s share was trading at $188.07 as of 10^th June. ALGN’s trailing and forward P/E were 32.9 and 17.7 respectively according to Yahoo Finance.

A patient's smile enhanced by a dental technology device.

Align Technology (ALGN), the maker of Invisalign and leader in clear aligners with over 90% market share, offers a compelling, if measured, investment case. Historically, ALGN traded at high valuations—around 32x P/E during its growth phase and peaking at 80x in 2018—reflecting both its strong brand moat and investor enthusiasm. However, despite doubling its earnings since then, the stock has corrected sharply due to overvaluation, trading now at 18x P/E with consensus expecting ~10% annual EPS growth over the next three years.

Using a conservative fair value estimate of $200 based on a 10.8 EPS average and historical valuation norms, the stock appears to offer a ~20% discount from current levels near $180, suggesting ~10% annual returns if the multiple remains steady.

Importantly, Align has a strong track record of meeting or beating analyst expectations, lending confidence to forward projections. Morningstar supports the undervaluation thesis, assigning a fair value of $240 and a narrow moat rating, though they acknowledge macro and competitive risks.

Align’s moat stems from intangible assets like SmartTrack materials and 25 years of clinical data, high switching costs for doctors, and some indirect network effects. Though it lacks a cost advantage or natural scale barriers, its capital allocation is sound: debt-light, R&D-focused, and growth-oriented. Strategic acquisitions like Exocad complement its innovation roadmap, while minimal buybacks and no dividends reflect a long-term growth posture.

Overall, Align represents a high-quality business trading at a fair price, with moderate upside for investors comfortable with industry cyclicality and valuation-driven risk.

Previously, we covered a bullish thesis on Procter & Gamble (PG) by Librarian Capital, emphasizing its brand dominance, resilient cash flows, and appeal as a defensive compounder amid consumer headwinds. DIY Investor’s thesis on Align Technology (ALGN) contrasts this with a growth-oriented case, highlighting Invisalign’s moat, earnings momentum, and undervaluation after a sharp multiple compression.

Align Technology, Inc. (ALGN) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 52 hedge fund portfolios held ALGN at the end of the first quarter which was 58 in the previous quarter. While we acknowledge the risk and potential of ALGN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.