Healthcare Services: An "Unsexy" Business
05/12/2016 7:00 am EST
We are now entering what traditionally has been the toughest time of the year. So it is very much a stock picker's market, explains Nicholas Vardy, editor of Bull Market Alert.
Our latest recommendation, Healthcare Services Group (HCSG), is an example of the type of stock that is independent of the market's general moves.
Small-cap stock HCSG is in a very unsexy business, as it provides housekeeping, laundry, linen, facility maintenance and dietary service departments to nursing homes, retirement complexes, rehabilitation centers and hospitals in the US.
Here's why I expect the stock to continue its strong recent run.
On April 13th, the HCSG announced strong earnings for the 1st quarter, with earnings increasing 18% year over year -- in stark contrast to most large-cap companies.
HCSG's bottom-line growth was driven by a strong increase in revenues, supported by a whopping 70% market share in its sector.
The company's board of directors also declared a quarterly cash dividend of $0.1825 per common share -- the 52nd consecutive quarterly cash dividend payment, as well as the 51st consecutive increase since its initiation of quarterly cash dividend payments in 2003.
From a technical standpoint, the stock also is strongly outperforming the market, rising 8.55% in year to date, compared with the S&P 500's gain of 1.05%.
Finally, HCSG is held by no fewer than 12 small-cap investment strategies focused on factors as wide ranging as growth, low volatility and momentum. In short, there's a lot of smart money that is betting on this stock.
By Nicholas Vardy, Editor of Bull Market Alert
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