AMS: Gamma Knife Gains

11/22/2002 12:00 am EST


John Buckingham

Editor, The Prudent Speculator

"The key to our strategy is simple," says John Buckingham, editor of The Prudent Speculator. "We buy ownership in corporations at discounts of 50% or more to what we calculate as the fair market value." For the 25 years through 8/31/02, this portfolio approach has outperformed the S&P 500 by 471%. The advisor now see value in a medical device maker.

"With greater attention being paid to dividend yields these days, we think that investors should not overlook tiny American Shared Hospital (AMS AMEX). Via its majority owned subsidiary, GK Financing, the company supplies hospitals with the Gamma Knifea non-invasive treatment for brain tumors, vascular malformations, and trigeminal neuralgia (facial pain). 

"The company believes that the Gamma Knife is the gold standard in radiosurgery, reducing surgical risk and patient discomfort, resulting in a shorter hospital stay and low risk of complications. In most cases, Gamma Knife patients resume their normal activities within a few days of treatment, compared to weeks or months for patients who undergo conventional surgery. More than 180,000 patients worldwide have received this treatment at 14 units. At least two more Gamma Knife projects, including one at The Johns Hopkins Hospital in Baltimore, are slated for 2003.

"American Shared reported banner third quarter results as year-over-year revenue rose by 17% to $3.6 million. Earnings for the period climbed 11% to $0.06 a share. We think this stock is a bargain. The company sports a book value of $3.79 a share. The company claims its balance sheet is strong, even though long-term debt is in excess of $25 million, while cash is $10 million. Of course, the fact that the company pays dividends at an annual rate of $0.12 a share, making the current yield 3%, is a testament to its financial health. We would buy this thinly-traded stock up to $4.08 a share."

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