The injectable weight loss drugs known as GLP-1 agonists have taken the world by storm. And the stocks of the companies making the drugs have crushed the market over the past couple of years. However, an industrywide shortage for the drugs opened the door for companies like Hims & Hers Health (NYSE: HIMS) to compete by offering lower-priced compounded versions mixed up by their teams.

Hims & Hers stocks took flight once the company announced it was bringing compounded GLP-1 agonists to market.

However, there is speculation that the shortage could end, and Hims & Hers has fallen back to earth since announcing its second-quarter earnings on Aug. 5.

Is the stock's recent tumble an opportunity making it the best growth stock to buy? Or is Hims & Hers a fluke that has already had its 15 minutes of Wall Street fame?

The GLP-1 hype misses the point

Hims & Hers has gotten attention for selling pharmacy-made compounds containing semaglutide, the active ingredient in Novo Nordisk 's Ozempic. Patients can buy these for much less than what the drug manufacturer charges. The well-documented demand for GLP-1 agonists highlights a straightforward growth opportunity for Hims & Hers that the market has been homing in on.

Ironically, the market is focusing on this and ignoring most of the business. Hims & Hers is a telehealth platform that sells prescribed and over-the-counter products for various conditions, including those affecting skin, hair, sexual health, mental health, and more. Hims & Hers generated $315 million in revenue in Q2, a 52% year-over-year increase. How much of that was from GLP-1 sales? Just $15 million, or under 5% of sales. In other words, Hims & Hers is growing just fine without GLP-1 sales. Sure, GLP-1 products could further pour gas on the fire, but the fire is hot.

The stock's recent volatility likely stems from concerns that the GLP-1 shortage is ending, which would theoretically prevent Hims & Hers from selling its compounded versions.

There are two reasons why this fear could be overstated. First, as I noted, Hims & Hers is doing just fine without GLP-1 agonists. Its non-GLP-1 weight loss products launched within the past year are already at a $100 million annualized run rate . Second, there is legal precedent that compounded drugs, which are formulated to each patient's needs, fall outside manufacturers' patents. Management believes this will allow it to continue selling compounded GLP-1s after any shortages end. Hims & Hers has added a former Novo Nordisk executive to its board, who believes Hims & Hers will continue selling compounded GLP-1s. Management is confident enough that it bought a compounding facility to increase its production capacity.

But what if Hims & Hers is wrong? Well, Hims & Hers still sells name-brand GLP-1s, so it could potentially convert compound users to the patented versions in a worst-case scenario. It's unlikely that GLP-1 sales will completely disappear.

Here's the bottom line: GLP-1 growth is excellent, but it's only the icing on the cake. Hims & Hers continues to grow rampantly, with or without compounded GLP-1 offerings.

An artificial intelligence company in the making?

U.S. healthcare is infamously archaic, and has many moving parts. This could be an opportunity for a data-driven company like Hims & Hers to disrupt and grab market share. That's not to say legacy healthcare companies don't use technology, but it's clear from Hims & Hers' growth that patients are looking for better experiences at lower prices and the company can use customer data to provide that.

The company said that approximately 40% of subscribers used personalized treatments in the most recent quarter. It uses patient data to formulate unique blends and dosages to provide better patient treatments. This potential competitive advantage takes these medical products from commodities to sticky, unique offerings patients can't get elsewhere.

Additionally, management noted that the company is looking for a chief technology officer with artificial intelligence expertise to help build its AI engine. Hims & Hers could leverage AI to analyze patient data and prescribe products instead of depending on human physicians. That could help fuel growth.

Is the stock right for you?

Hims & Hers stock trades at just 28 times its estimated 2024 earnings. That's hilariously inexpensive for a company that's:

Hims & Hers would have to mess up badly not to grow earnings fast enough to justify paying a price-to-earnings ratio of 28 today. Yes, the company has that much growth momentum.

However, the stock isn't for everyone; Hims & Hers is a classic case of high risk, high reward.

It's a young and growing business that faces numerous risks, including regulatory threats and potential court battles over its compounding business. The stock's potential upside is perfect for growth-oriented investors who can tolerate volatility and manage the risks they take. More conservative investors would likely do better looking elsewhere.

Before you buy stock in Hims & Hers Health, consider this: