Jul 23, 2010 10:31 AM PDT
Trends, Charts and Exclusive Opinion
A SmallCap Healthcare and Two S&P 600 SmallCaps Advance
HGRD: Ranking Hospitals Turns Into a Good Business Model
MANH: New China Client & a Q4 EPS that Tripled Y-O-Y
IVAC: New Orders and a Strong Q4 EPS Sends Shares Higher
Gaining as much as 11.06% this morning is Health Grades Inc., (HGRD) http://www.healthgrades.com/ currently trading in the $4.90 range. HGRD has a 52-week high of $5.30 (a current 40 cent spread) set on 09-29-09. HGRD has trailing twelve month revenues of $49+ million with a positive, corresponding diluted EPS of $0.21. HGRD is widely owned by insiders and institutions. HGRD was trading at a $2 floor in the spring and then shot up to the $3.50 range in May and established a $4.50 floor in July with spikes into the $5 range throughout the fall.
Even though it’s within 40 cents of its high, HGRD at this price is a ‘Buy’ for me. I don’t believe the stock is going to drop much lower in the near-term (3 Mo) and buyers have a way of setting a bottom at every threshold crossed by HGRD. I’m not very good at setting target prices, but I like the HGRD business model enough to say it will top its 52-week high and to see it trading in the $6-7 range in the short-term (6 Mo) wouldn’t surprise me.
There’s Money in Report Cards
What HGRD does is provide ratings or profile information relating to approximately 5,900 hospitals, 750,000 physicians in 125 specialties, and 15,000 nursing homes. HGRD releases rating on regional hospitals as they develop and a complete annual study that is more comprehensive. In its 2010 study, HGRD independently and objectively analyzed approximately 40 million patient records from the Centers for Medicare and Medicaid Services for fiscal years 2006, 2007 and 2008, for 26 medical procedures and diagnoses at every one of the nation’s nearly 5,000 non-federal hospitals.
To qualify for the list, hospitals were required to meet minimum thresholds in terms of patient volumes, quality ratings and the range of services provided and hospitals that scored in the top 5% or better nationally were then recognized as Distinguished Hospitals for Clinical Excellence.
A short example, on Jan 26 HGRD said in a new study that hospitals rated in the top 5% in the nation have a 29% lower risk-adjusted mortality rate. Important to know if you’re ‘checking in’. Hospitals in the top 5% and designated Distinguished Hospitals for Clinical Excellence by HGRD also had risk-adjusted complication rates that were 9% lower than all other hospitals. Again, important to know if you’re ‘checking in’. HGRD recently recognized 13 South Florida hospitals for their clinical performance. They also noted those in the middle and those that failed their rating methodology.
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Gaining 7.16% this morning is S&P SmallCap 600 company Manhattan Associates Inc., (MANH) http://www.manhattanassociates.com/ currently trading in the $23.17. MANH has a 52-week high of $24.95 set on 12-30-09. MANH has trailing twelve month revenues of $260+ million and a positive, corresponding diluted EPS of $0.56.
On a public float of 22+ million shares, MANH has a short percentage of 8+% which is a little high, but the downward pressure hasn’t suppressed the value and since a lot of institutions own MANH, I think the short percentage is a result of some ‘hedge’ strategies. As an investor, I would confirm that as fact. MANH was trading in the $15 range a year ago and ‘in spurts and spikes’ reached $24 in mid-Oct. MANH has maintained that price level as its bottom for the last 3-Months. I really like this business model as well, an essential service in supply chain provisions, and believe MANH can really produce ‘new’ revenues in a global recovery. MANH is short-term ‘Buy’ for me. There’s an approximate $1.78 spread to its high and that’s where a profit could be made.
Yesterday, MANH announced two significant pieces of news: 1) a leading distributor and retailer of pharmaceutical products based in the Hebei Province of China, has chosen the MANH Warehouse Management solution as the technology backbone to support its distribution operations serving upstream and downstream customers across China and 2) MANH Q4 earnings tripled from the year before, despite a modest drop in revenues. MANH earned $5.87 million, or 26 cents per share, compared to $1.98 million, or 8 cents per share, in the fourth quarter of 2008.
On a closing note, in January, MANH also announced that Russian regional food distributor Geba had initiated a project to automate its distribution center in Novosibirsk (the largest City in Siberia and third largest city in Russia after Moscow and St. Petersburg) in Southern Russia, using MANHs logistics execution system, Manhattan SCALE. MANH has more than 1200 clients worldwide.
Gaining 4.5% this morning is S&P SmallCap 600 company Intevac Inc., (IVAC) http://www.intevac.com/ currently trading in the $15.12 range. IVAC has an average 3-Month daily trading volume of 126,406 shares. IVAC has a 52-week high of $16.85 set on 01-10-10. IVAC has trailing twelve month revenues of $60+ million and is widely held by institutions. IVAC was trading at $4 in March and made a very, very, very steady climb into the $13 range by Oct. IVAC struggled a bit maintaining a $12 floor for the following 3-Months, but then shot up to $16 in Jan mooting the point. IVAC has an approximate $1.73 spread off its high and I believe it will re-take that near-$17 range in the next 3-Months, so IVAC is a near-term ‘Buy’ for me.
New Orders and a Strong Q4
Yesterday, IVAC also had two pieces of excellent news: 1) the Company announced orders for eight 200 Lean magnetic disk sputtering systems (its primary product), scheduled for delivery in the second and third quarters of 2010 and 2) IVAC posted Q4 net income of $2 million, or $0.09 per diluted share vs. a Q4 2008 net loss of $12.6 million, or $0.58 per diluted share. Good Recovery.
About the new orders, Kevin Fairbairn, president and CEO of IVAC said, “We are pleased to announce these orders from two major hard drive manufacturers, representing both legacy tool replacements and incremental capacity. With the receipt of these orders, our backlog has increased to include 18,200 Lean systems, a level we have not seen since 2007.”
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