Back in May, I wrote that Senseonics (NYSEAMERICAN:SENS) stock was likely to rise from $1.80 to over $3.00 per share. Now this has happened; on Aug. 9, SENS stock closed at $3.25 per share. Yet, it still looks like a good buy from here.

Why? Well, for the past three months, SENS stock has had a nice run-up. The stock bottomed out on May 13 at $1.71. Since then, though, it has spiked 90% to that Aug. 9 price. Plus, much of that gain has happened since Jul. 15, when SENS stock briefly bottomed again at $2.77.

So, here’s why I believe there’s a case for SENS today.

Where Things Stand with SENS Stock

Senseonics makes long-term, implantable continuous glucose monitoring (CGM) systems for people with diabetes. Apart from its technology, though, one reason SENS stock has risen is that the company recently reported that it raised $50 million gross from an at-the-market (ATM) equity offering program. Now, it has $69.75 million in cash on the balance sheet.

This is important since the company burnt through $30.4 million in the last six months. This can be seen on in its recent 10-Q filing, in the Unaudited Condensed Consolidated Statement of Cash Flows (Page 6). This shows that the GAAP net income loss of $429 million for the six-month period actually was just $30.4 million in negative cash costs from an operating cash flow standpoint.

Given that its first-quarter cash flow loss was $16.3 million, this implies that Q2 had a slightly lower $14.1 million cash burn. This also implies that its annual run-rate cash burn is just $56.4 million going forward. So, theoretically, it has enough cash ($69.75 million) to cover a similar cash burn over the next 12 months.

However, that won’t likely happen. If the U.S. Food and Drug Administration (FDA) begins to approve its CGM system, the company can start selling it in the United States. No doubt, that will greatly improve its cash burn and likely result in positive free cash flow (FCF) within the first year.

For example, analysts estimate average revenue of $13.82 million this year. And for next year? They forecast $33 million in sales.

Where This Leaves Senseonics

This represents a fairly high multiple for the stock. For example, Yahoo! Finance recently indicated a market capitalization of $1.39 billion for SENS stock. If its 2022 sales forecast of $33 million comes through, then SENS stock trades for 42 times forward sales (i.e., $1.39 billion /$33 million).

That’s a little high, but given that its sales are likely to keep rising each year, it might be reasonable. I postulated in my previous article that, just as Dexcom (NASDAQ:DXCM) has performed well over the last five years, Senseonics will likely have a similar track record.

For example, Seeking Alpha has a survey from analysts forecasting $160 million in sales by 2025. That is 4.5 years from now and its present value at 10% is worth 65.1% of that amount, or $104 million. That puts SENS stock on a forward P/S multiple of just 13 times — not so unreasonable.

Moreover, let’s assume that by then the company can make a 25% FCF margin. That puts its gross FCF then at $40 million, or $26 million in present value terms. But using a 1.5% FCF yield (i.e., dividing $26 million by 1.5%) its target market value would be $1.73 billion. That implies that SENS stock is still worth 24% more (i.e., $1.73 billion / $1.39 billion) using its recent market capitalization. This puts the stock’s value at $4.03 per share.

What to Do with SENS Stock

The point here is that there’s still plenty of room for the stock to move significantly higher. Here’s an example. If we divide the $26 million in present value FCF estimate by 1.0%, the market value should be $2.6 billion. That is 87% higher than the Aug. 9 price, or $6.08 per share.

So, depending on when the FDA approval comes in — and how fast the company can roll out its implantable CGM systems — SENS stock is likely to move much higher. My best guess is that it’s worth at least $4.03 and that it could be worth as much as $6.08 per share.

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On the date of publication, Mark R. Hake did not hold (either directly or indirectly) any positions in any of the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.