|Written by GSCR Staff|
|Thursday, 04 August 2016 05:54|
In Monday’s Goldman Guide we pointed out that we expect this August to be the normal bear that it historically has been. Yesterday, we got a bit of relief with a slight uptick in US markets. It may be time to look for an investment ‘buy and hold’ theme.
The Zika virus is front page material and has made its way into the United States. Several of our athletes, particularly in outdoor sports like golf, have declined to go to Rio over the growing Zika epidemic there.
The Female Health Corporation (NASDAQ – FHCO - $1.35) is a relatively cheap stock with that is currently trading above its 25-day EMA as illustrated in the chart below.
FHCO 6-Month Chart, 25 Day EMA
The Female Health Company develops, manufactures, and markets consumer health care products. It offers the FC2 female condom that provides women dual protection against unintended pregnancy and sexually transmitted infections, including HIV/AIDS. The Company sells its products to global agencies, non-government organizations, ministries of health, and other government agencies directly, as well as through distribution agreements and other arrangements with commercial partners. It operates in South Africa, Angola, Uganda, Nigeria, Zimbabwe, Tanzania, the United States, the United Kingdom, Brazil, Malaysia, the Democratic Republic of the Congo, and internationally.
Currently there are no drugs or vaccines available to treat Zika. Female condoms are considered a healthy choice to help limit the spread of the disease, since the virus can be transmitted through sexual contact. The U.S. Centers for Disease Control is recommending those who live in a state or area with the mosquito that spreads Zika virus to create a prevention kit. The suggested kit includes a bed net, standing water treatment tabs, insect repellent and the FC2 condoms. The threat of Zika in the US is boosting demand for the Female Health Company’s FC2 and additionally the Ministry of Health in Brazil is planning to dispense 100,000 FC2 female condoms to athletes participating in the 2016 Summer Olympics in Rio de Janeiro.
An impressive metric on the technical side is the short float of only 1.2% for FHCO. Additionally, the Company has $3.2 million on cash with zero debt as of the end of 2Q 2016. Finally, the margins are extremely impressive with 10.9% profit margin and 15.9% operating margin.
With the inevitable increased demand for The Female Health Company’s FC2 condom to fight Zika and the impressive metrics we pointed out, the time is right to buy into FHCO. Look for the stock to climb back to $2.00 by the middle of Q4.
Have a great day!
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