When it comes to small caps, the best opportunities often lie off the beaten path — businesses that are underfollowed, underappreciated, but executing on strong fundamentals with powerful tailwinds behind them.
Today, I want to highlight two such companies that I believe might be poised for significant upside in the years ahead.
Based on your feedback, I’ll pick one to explore in more depth later on.
1) Alvotech (ALVO)
To understand Alvotech’s opportunity, you first need to understand biosimilars — a high-growth but underappreciated corner of the pharmaceutical industry.
Biologics are complex medicines made from living cells and used to treat chronic, life-threatening conditions such as cancer, rheumatoid arthritis, and autoimmune diseases. These drugs are highly effective — but also some of the most expensive treatments in the world, often costing tens or even hundreds of thousands of dollars per year.
Biosimilars are near-identical versions of these biologics. While not exact copies (due to the complexity of biologics), they must prove through analytical studies and clinical trials that they have no clinically meaningful differences in terms of safety, efficacy, or quality.
• Difference from Generics: Generic drugs are exact copies of simpler, chemical-based drugs (like aspirin or ibuprofen). They’re identical to the brand-name drug in ingredients and effects, while biosimilars are just "close" because of how complicated the original biologic drugs are to make (it’s impossible to produce an exact generic version, only a biosimilar).
The value proposition is enormous: biosimilars can reduce treatment costs by up to 70% in some cases, improving access and easing the financial burden on healthcare systems. And with many major biologics — like Humira, Stelara, Eylea, and Prolia — facing imminent patent cliffs, the global biosimilar market is entering a period of explosive growth.
According to industry forecasts, the market is expected to grow at a 17% CAGR over the next decade, reaching $126B by 2032.
Yet building a biosimilar is not as easy as building a generic drug. Development timelines range from 6–9 years, with capital requirements of $100–300M per molecule. Success demands advanced manufacturing, regulatory expertise, long-term planning, and global scale. That’s where Alvotech comes in.
A Pure-Play Biosimilar Platform — Built From the Ground Up
Founded in 2013, Alvotech is one of the only pure-play biosimilar companies globally — and one of the few with full, end-to-end control of the biosimilar value chain, from cell line development to commercial-scale manufacturing.
While most pharmaceutical companies treat biosimilars as side projects within a larger portfolio, Alvotech was built from day one to specialize in biosimilars. That singular focus has allowed it to develop deeper expertise, faster development cycles, and a more capital-efficient business model.
Its fully integrated platform handles everything internally — from cell line development to clinical trials to commercial-scale manufacturing. This vertical integration translates into:
Greater speed to market
Better quality control
Stronger gross margins
Lower long-term CapEx per molecule
Importantly, the platform is scalable. Once a manufacturing and development process is in place, Alvotech can add new biosimilars to its pipeline with relatively low incremental cost, a key advantage as the company prepares for multiple product launches in the coming years.
State-of-the-Art Infrastructure in Iceland
Alvotech’s biotech campus in Reykjavik, Iceland is a multiproduct, flexible biomanufacturing facility built specifically for biosimilar production in June 2016. Few small-cap biotech firms can claim this kind of infrastructure.
This facility is not just a manufacturing plant — it’s the backbone of Alvotech’s platform strategy. It enables:
Full control of production from start to finish
Reduced reliance on third-party manufacturers
Improved agility in response to market demands
Regulatory compliance across global jurisdictions (FDA, EMA, etc.)
As more biosimilars gain regulatory approval, this facility can efficiently scale to support commercial rollouts across multiple regions.
Additionally, recently Alvotech expanded its development capabilities through the acquisition of Xbrane’s R&D operations in Sweden. This move strengthens Alvotech’s upstream platform by integrating additional preclinical and early-stage development capabilities — especially around cell line engineering and analytical characterization. It also adds technical talent and infrastructure in a key EU biotech hub, further bolstering the company’s end-to-end control of the biosimilar pipeline.
A Robust Pipeline Targeting Blockbuster Biologics
Alvotech’s pipeline includes biosimilars to some of the highest-grossing drugs in the world, including:
AVT02 – biosimilar to Humira (already launched)
AVT04 – biosimilar to Stelara (already launched)
AVT06 – biosimilar to Eylea
AVT03/AVT07 – biosimilars to Prolia/Xgeva and Simponi
And many others.
This entire pipeline represents a TAM of over $185B globally. Several of them are already off-patent in key geographies, giving Alvotech a clear path to revenue growth.
The company’s lead product, AVT02, is already commercially launched in Europe in the U.S. (FDA approved) under the interchangeability pathway — an important milestone that allows pharmacists to substitute it for Humira without physician involvement. That’s one of the main reasons why the company’s revenue increased 427% YoY in 2024.
More product launches are expected in the next 1–3 years, setting the stage for a major revenue ramp.
Global Distribution Partnerships That De-Risk Commercialization
Alvotech doesn’t go it alone when it comes to commercialization. Instead, it licenses its biosimilars to established pharmaceutical companies with local market expertise and regulatory experience.
Its partners include:
Teva Pharmaceuticals (U.S.)
Dr. Reddy's (Worldwide)
STADA Arzneimittel (Europe)
Fuji Pharma (Japan)
Bioventure (Middle East and North Africa)
Advanz Pharma (UK)
Biogaran (Worldwide)
And many others.
In total, Alvotech has 19 global partners for local market access, covering 90 countries. These partnerships allow Alvotech to scale internationally without building its own salesforce, while also reducing risk around pricing, market entry, and regulatory navigation. In exchange, the company typically earns upfront payments, milestone fees, and revenue-based royalties.
This asset-light model enables Alvotech to focus on what it does best — developing and manufacturing biosimilars — while its partners handle the complexities of distribution, reimbursement, and regional branding.
Near-Term Revenue Inflection + Long-Term Margin Potential
With AVT02 and AVT04 already in the market and additional launches expected soon, Alvotech is approaching an inflection point in revenue and cash flow.
Management has guided for ~$1.5B in revenue by 2028, with EBITDA margins of 40–45%. This represents a massive increase from 2023, when the company generated just $91.4M in sales and posted negative margins.
This financial trajectory stands in stark contrast to many biotech companies, which often struggle with high cash burn and narrow product bets. Alvotech’s pipeline, platform model, and de-risked revenue streams offer a rare combination of growth and capital efficiency.
Importantly, based on current operating plans, the company expects to be FCF positive in 2025.
Founder-Led with Deep Industry Roots
Alvotech is the brainchild of Róbert Wessman, a prominent figure in global generics and biosimilars. Prior to founding Alvotech, Róbert served as CEO of Actavis (now part of Teva) and later founded Alvogen, which grew into a multinational generics firm with operations across more than 30 countries.
He launched Alvotech in 2013 with the goal of building a pure-play biosimilars company that could match Big Pharma on scientific rigor but operate with the focus, speed, and cost-efficiency of an independent biotech.
But Róbert Wessman is not just a founder in name — he retains significant control over the company through two key vehicles:
Aztiq Pharma Partners, his private investment firm, holds 33.5% of Alvotech’s shares.
Celtic Holdings, a joint venture between Aztiq and UAE-based YAS Holding, owns an additional 29.8%.
Together, these two entities control over 63% of the company, giving him both financial and strategic control — while also ensuring long-term alignment with shareholders.
He serves as Chairman & CEO and is deeply engaged in both strategic decisions and global partnerships. His track record in scaling complex global supply chains and building commercial partnerships is probably a key reason why Alvotech has been able to punch above its weight in a capital-intensive industry.
Valuation
You already know my mantra: if I have to build a DCF model just to figure out whether a company is cheap, then it probably isn’t cheap enough.
Based on management’s guidance for 2028, Alvotech is currently trading at ~4x its projected 2028 EBITDA.
For a company with this kind of growth trajectory — and a pipeline that suggests momentum could continue well beyond 2028 — that multiple feels extremely low. Long-term, EBITDA margins are expected to expand to as high as 60%, making this a rare mix of scale, profitability, and runway.
If Alvotech simply trades at 10x EBITDA in 2028 and achieves its guidance, that would translate into a ~150% return, or an IRR north of 35%. And that’s just using a modest multiple. Based on typical industry comps, it could reasonably command a much higher valuation, which offers an added margin of safety in case these projections prove slightly optimistic.
All things considered, I believe this could be an excellent opportunity to gain exposure to an underappreciated segment of healthcare that’s poised to become increasingly important in the years ahead.
2) Vista Energy, S.A.B. de C.V. (VIST)
Vista Energy offers rare, high-quality exposure to Vaca Muerta — Argentina’s most prolific shale basin and one of the largest unconventional oil and gas plays outside of North America.
Vaca Muerta: A World-Class Shale Resource
Often referred to as the “Permian of the South”, Vaca Muerta holds enormous potential due to its thick shale formations, high organic content, and improving recovery rates. The basin is still in early innings compared to the Permian, but recent good performance and increased capital inflows suggest it could become a major global shale hub over the next decade.
Vista is strategically positioned in this basin. It holds prime acreage in the Neuquén Basin and is already the second-largest shale oil producer in Argentina, with ample room to grow.
As global investors look for oil supply diversification outside of the U.S. and Middle East, and as Argentina opens up its energy sector, Vaca Muerta — and Vista by extension — stands to benefit from rising international interest.
Low-Cost, High-Return Oil Production
Vista’s operations are defined by operational discipline and cost leadership. The company boasts one of the lowest lifting costs in Latin America, with lifting costs as low as $4.6/boe (down 67% since 2018) — a level that rivals many U.S. shale producers and that translates into an impressive Adj. EBITDA margin of 65%.
This is largely due to its flagship block, Bajada del Palo Oeste, which has demonstrated some of the highest-return wells in Argentina. As the company applies learnings across its portfolio, it continues to drive down drilling and completion costs, while enhancing recovery rates.
Operational efficiency is more than a margin story — it’s a strategic moat. It gives Vista the ability to stay profitable even in low oil price environments and to internally fund growth without relying on expensive capital.
Rapid Production Growth and Operating Leverage
Vista is in the middle of a multi-year production ramp, driven by an aggressive but disciplined development plan. The company has rapidly increased its shale oil output since inception, and with each additional barrel, it benefits from operating leverage.
This scale allows Vista to spread fixed costs over more barrels, expanding margins and improving FCF conversion. As it brings more wells online — particularly in high-return zones — Vista expects to drive both volume growth and margin expansion in tandem.
Importantly, the company’s growth is not speculative. Its development plan is fully funded by operating cash flow, meaning it can scale production without jeopardizing balance sheet strength. Yes, Vista has some debt, but it’s manageable and strategic, not the result of financial distress. Its development plan is currently funded by operating cash flow, but the debt on its books reflects earlier expansion efforts and the realities of funding large-scale oil projects in emerging markets. Importantly, its balance sheet leverage remains well below the industry average.
Founder-Led With Deep Energy Experience
Vista was founded in 2017 by Miguel Galuccio, a petroleum engineer and former CEO of YPF — Argentina’s state-controlled oil giant. Galuccio is widely respected in the energy industry for leading one of the most effective corporate turnarounds in Latin America during his time at YPF.
At Vista, he sought to apply his learnings in a leaner, more agile context. His vision: build a next-generation E&P company that marries international capital discipline with deep local knowledge of Argentina’s geology and regulatory landscape.
Vista was formed as a SPAC, backed by Riverstone Holdings, a prominent U.S.-based energy-focused private equity firm. The IPO raised $650M and enabled Vista to acquire a substantial portfolio of oil and gas assets from Pluspetrol and APCO — giving it immediate production scale and a solid asset base.
Today, Miguel Galuccio remains Vista’s largest shareholder, further aligning his long-term vision with investors.
The Argentina Macro: Risk and Opportunity
Let’s be clear — operating in Argentina comes with real macro risk. The country has a history of currency volatility, inflation, capital controls, and policy unpredictability. But in Vista’s case, several mitigating factors and tailwinds are worth noting:
Dollarized Revenues: A significant portion of Vista’s oil is sold for export, with revenues denominated in U.S. dollars. This provides a natural hedge against currency depreciation.
Policy Reforms: Recent government reforms have signaled a shift toward market-friendly energy policy, including clearer pricing frameworks and incentives for export-oriented production.
Growing Demand for Energy Exports: With global energy security in the spotlight, Argentina could become a major regional supplier — especially in the Southern Cone and parts of Asia.
In short, while Argentina is not for the faint of heart, the risk-reward is asymmetric. Vista offers a leveraged way to play a potential energy renaissance in a country that is rich in hydrocarbons but historically constrained by poor policy. If reforms stick, the upside could be substantial.
Vista’s Strategic Edge: Scale, Cost, and Leadership
All in all, what separates Vista from other regional oil companies is not just its acreage — it’s the combination of cost efficiency, operational excellence, and management alignment.
In an industry often plagued by short-term thinking, Vista is building for the long term:
Its wells are among the most productive in Latin America.
Its lifting costs are among the lowest.
Its management team is deeply experienced and heavily invested.
Its financial profile is resilient, even at lower oil prices (which is especially important given the current market environment).
This makes Vista more than just a “bet on Argentina”. It’s a scalable, disciplined shale operator with global-class assets in an emerging market on the cusp of energy reform.
Valuation
Vista Energy continues to prove itself as a model of consistent and disciplined execution.
At its 2021 Investor Day, the company laid out mid-term guidance for 2026: targeting production of 80 mboe/d and ~$1.1B in adjusted EBITDA.
Fast forward just two years to 2023, and Vista raised the bar significantly. Its updated 2026 guidance called for 100 mboe/d in production and ~$1.7B in adjusted EBITDA.
Now, Vista is projecting 95–100 mboe/d and $1.5–1.65B in adjusted EBITDA by 2025 — a full year ahead of the original timeline. That’s not just hitting targets — it’s consistently outperforming them.
Despite this track record, the company’s valuation still doesn’t seem to reflect the quality of its execution.
When I started writing this, the stock was trading in the low $30s. Since then, it’s already broken into the $40s and now trades around $41 per share — equating to a market cap of roughly $4B.
Analysts are projecting close to $2B in EBITDA by 2027. Using that estimate, which is conservative IMO, Vista is currently trading at just 2x 2027 EBITDA — a ridiculously low multiple, even for the energy sector.
For context, Vista’s average (and median) EV/EBITDA multiple since its inception in 2018 is 4.6x. If it were to revert to that average by the end of 2027, the stock would be trading roughly 130% higher than today, implying a CAGR close to 40%.
Yes, there are geopolitical risks, and yes, this is a company operating in oil & gas. But for those willing to look beyond U.S. borders and take a contrarian view on energy, Vista Energy might be one of the most compelling opportunities out there.
Its track record of value creation speaks louder than any headline.
Final Thoughts
These two companies are now firmly at the top of my watchlist.
While I don’t currently own either name, I’ve been tracking them closely over the past few years. Until recently, the valuations didn’t offer enough margin of safety — especially in Alvotech’s case, where much of the pipeline was still unproven. But with execution now coming through, regulatory and commercial milestones being hit, and multiples compressing, the risk/reward equation is starting to look far more attractive.
This wasn’t meant to be a full deep dive — just a high-level overview to put these under-the-radar names on your radar. If either (or both) sparked your interest, let me know in the comments which of them you'd like me to cover in more detail soon.
To be totally transparent, I’m currently leaning toward Alvotech, but I’m open to being persuaded.
Drop your vote in the comments — and thank you so much for reading!
Disclaimer: As of this writing, M. V. Cunha does NOT hold a position in either ALVO or VIST.
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Hi I enjoyed the article! Do you think alvotech will dilute by 2026? They have high development costs, the Xbrane acquisition and potentially higher manufacturing costs with the tariff uncertainties despite operating only in Iceland. Would love to hear your thoughts. Thanks!
Very promising finds! I'd love to hear more about ALVO - seems like a lot of potential there.
Thanks.