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Amedisys Inc (AMED), a provider of home health care and hospice services, posted second-quarter results that beat market estimates and said its integration of TLC Health Care Services was ahead of schedule.
Net service revenue rose about 85 percent to $312.7 million.
As I have written before I simply love this company - it has all the makings of a fantastic growth story - here's why:
1. It's a small cap. At under 2 billion valuation these guys can multiply 5 fold in value before reaching any kind of market saturation.
2. AMED is on an aggressive buying spree - bought two old age facilities since the year began and still retain a reasonable ROE of 16%
3. This whole sector is racing up - take a look at the industry chart compared to the S&P - like a mirror image.. Old age care is breaking out in a sprint:
http://www.marketguru.com/home-health-care/1006,526
4. The one thing you can count on in this market is that baby boomers are retiring, getting old and in dire need of these services.
Hope the run continues.
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blacktuna
Jul 29 at 11:16 ET
finger lickin' good.
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ITGURU
Jul 29 at 7:13 ET
What are your thoughts on the 28% short interest in this?
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guliamo
Jul 30 at 2:34 ET
Hi IT,
I think the high short ratio comes from the high debt that AMED has assumed. The debt isn't from continued operations but from buying up the competition.
Under normal circumstances this would be troubling, but I don't see how revenues can fall for this company - demand is rock solid and will continue to be so for many years to come.
Technically i can see why shorters would love this company. It's grown fast in value and has a lot of debt - that would get them on the shorter's radar easily, but I think the growth in value comes from real growth.
Don't forget that a heavily shorted stock is also an opportunity - if the company holds up to it's plan, shorters will have to cover their position and stock price can rise even more, we'll have to wait and see..
Top 1%
guliamo
Aug 09 at 11:54 ET
Hi skinny,
If the market starts looking up, I don't see why AMED will suffer from this. If anything, with more money coming into the market AMED should rise even more.
I can't speak of short term though, since i am not that kind of investor. all I know is that old age health care facilities are going to be coming under huge demand over the next 15 years and if AMED keeps acquiring the competition while managing things responsibly they will be best positioned to enjoy this huge influx in future demand. My 3 year outlook on this stock says it will double at the very least.