The Forgotten Sector?

Written by GSCR Staff   
Friday, 20 February 2015 06:35

Global terrorism and how to combat it. Immigration. Cheap oil and gas.

Everyone seems to have forgotten that another enrollment period for Obamacare has come and gone. This may be fortunate for the POTUS.

 

Over the past several weeks we have been somewhat guilty of ignoring what is the behemoth sector that is healthcare. A stock that appears to be a solid buy is Liberator Medical Holdings, Inc. (NYSE – LBMH - $3.84). At our first technical glance the stock is very bullish in all durations out to 200-day EMA. A short float of 5.4% indicates there are not many doubters out there as well. The economic factors may also be in play.

 

Liberator together with its subsidiaries distributes direct-to-consumer durable medical supplies for seniors and others with chronic illness in the United States. The Company supplies urological, ostomy, and diabetic medical supplies, mastectomy fashions, and diabetic supplies. The population is aging, so the Company is certainly in an industry that is going to grow exponentially in the future. The Company recorded record revenue of nearly $75 million for its FY that ended Sept 30 last year and record Q1 FY15 revenue of $20 million. Consensus analysts’ estimates are for 9% growth to $82 million for FY15.

 

A dividend yield of 3.5% is another factor that makes LBMH very attractive. Additionally, a forward P/E of 13 versus a trailing P/E of 25 is another check mark for us. Finally, when we consider small cap healthcare, we must always consider M&A. Is this stock attractive as an acquisition? The chart below illustrates a comparison of similar small cap healthcare stocks in an important M&A metric of EV/EBITDA. (Enterprise Value/Earnings before Interest Tax Depreciation and Amortization). The lower the better, unless the value is negative which is bad.

 

EV/EBITDA LBMH COMPARABLES

 

MM.02.20.15.LBMHchart

 

 

 

The average EV/EBITDA value for non-negative stocks is just over 38. LMBH stands out here in a big way.

 

LMBH appears to be on another accumulation run. The healthcare sector continues to be a solid play as well. We think the stock climbs back to near $5 level by 3Q15.

 

Have a great day!

 

Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.

Disclaimer:

This Market Monitor blog was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research, which typically highlights small cap companies, and Goldman Opportunity Research, which features micro cap companies in a sponsored research format. Thus, the Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports. 

Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.

It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations. 

The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.

This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.

ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS   INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.

For more information, visit our Disclaimer: www.goldmanresearch.com

 

Add comment
  • No comments found