Healthcare Services: "An Unsexy Business"

12/09/2016 8:00 am EST


Nicholas Vardy

Editor, Oxford Wealth Accelerator

With the anti-health care stock scare is now fully out of the market; as a result, this healthcare company – a previous recommendation of ours -- is now back on its bullish, explains Nicholas Vardy, editor of Bull Market Alert.

Healthcare Services (HCSG) provides housekeeping, laundry, linen, facility maintenance and dietary service departments to nursing homes, retirement complexes, rehabilitation centers and hospitals in the United States.

This is a small-cap stock in a very unsexy business. Nevertheless, here’s why I expect HCSG to continue to bounce strongly, as well as to hold up well during any market pullback.

On October 11th, HCSG announced strong earnings for the third quarter, with both revenues and earnings increasing 9% year over year.

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 $0.1850 per common share -- the 53rd consecutive increase since its initiation of quarterly cash dividend payments in 2003.

From a technical standpoint, the stock has been a strong outperformer, rising 12.45% year to date, compared with the S&P 500’s gain of 8.66%. The stock has gained 7.66% over the past month.

HCSG is also held by 10 small-cap investment strategies focused on factors as wide ranging as growth, low volatility and momentum.

Analysts at Baird put a price tag of $46 on the stock, implying approximately 17.3% upside potential. I think that’s a target price it could reach quickly in today’s bullish environment.

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