Breakout in Surgery Centers

10/24/2003 12:00 am EST


Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

Each week, in his Ticker Tape Digest, editor and analyst Leo Fasciocco seeks stocks that have just broken out of long-term trading bases. His latest featured stock, AmSurg, is a "breakout play with solid earnings and good prospects for continued growth."

"AmSurg (AMSG NASDAQ) is our latest featured breakout. The firm operates practice-based ambulatory surgery centers that focus on a narrow range of high-volume, low-risk procedures such as biopsy, endoscopy, tonsillectomy, and laser eye surgery. It markets its centers directly to HMOs, PPOs, and other managed care organizations. It operates 110 facilities, mostly located in California, Florida, Ohio, and Tennessee. The company is adding facilities through acquisition and new development.

"The company’s growth outlook is very favorable due to demographic trends and a largely underpenetrated market. This year, we forecast a 26% increase in net to $1.46 a share. Going out to 2004, we see profits climbing 20%. Technically, the stock broke out powerfully from a four-month cup and handle base today with a bullish tape. This carried the stock to a new to a new high.

"We suggest a full position on this breakout. The stock should advance to 42 to 44 within the next six months. A stop can be placed near 31.90. Meanwhile, institutional sponsorship is excellent. 5-star-rated, Wasatch Small Cap Growth is the largest fund holder with 4.8% of the stock and Wasatch Micro Cap is the second with 3.1%. Both funds have kept their positions unchanged. Fidelity Small Cap Independence was a recent buyer of 546,000 shares, and Fidelity Small Cap Stock was a buyer of 267,000 shares."

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