The Polynovo Ltd (ASX: PNV) share price has had a strong run to start the year.
Shares in the medical technology group are up 69.35% since just the start of January. If we take that back to 12 months ago, PolyNovo shares are up 350% as one of the top-performing S&P/ASX 200 Index (INDEXASX: XJO) companies.
So, why are shares in this group rocketing higher and is there time to buy and cash in on the growth?
Why PolyNovo shares have surged higher this year
PolyNovo specialises in the development of biodegradable medical devices to aid in tissue repair.
The Aussie healthcare group owes much of its recent share price growth to strong results from its NovoSorb BTM product. The product is a synthetic polymer matrix that clinicians can use to treat serious burn victims.
PolyNovo has experienced strong sales growth in recent times and cracked the $2 million monthly sales mark in December 2019.
Operational expansion and entry into new markets have also been key. PolyNovo is looking to roll out its NovoSorb BTM product across several lucrative European markets.
Polynovo shares have been rocketing higher in 2020 but are trading near an all-time high, so is there time to buy?
Is now the time to buy for growth?
PolyNovo shares have clearly delivered for shareholders in recent times, but that's not always everything.
Personally, I like to invest in companies with strong cash flow and diversified earnings like Fortescue Metals Group Limited (ASX: FMG) or CSL Limited (ASX: CSL).
PolyNovo isn't a dividend-paying share (yet) and is near the top of its valuation cycle. That doesn't mean it's overvalued, but I do think it adds some risk.
We've seen some other hot growth shares like WiseTech Global Ltd (ASX: WTC) and Nearmap Ltd (ASX: NEA) crash lower in recent months. While PolyNovo isn't a pure ASX tech share, and could rocket higher this year, one slip-up on growth could send its shares plummeting.
