Hello Friends. It was nice chatting with you on Yahoo Stock Watch #1 the other night. I use the handle Reddyorknot when I am there so be sure to say hello! If you can believe it, I was actually busy with my real JOB today and didn't get a chance to post a pick. I saw this one earlier today and it looks like a winner to me: Merge Technologies (MRGE).
MRGE closed today at $18.99 up $2.38 or 14.33% on the day. Interestingly, it was up another $.46 or 2.42% after hours since the close...as I write. I do not own any shares of this stock and sure wish I could find some money. I may switch some things around tomorrow to purchase some....maybe. According to money.cnn.com, Merge "...provides software, hardware and systems integration products and services that enable health care organizations to network incompatible medical image- producing and image-using devices." We have another stock in our stock picks as well in my trading portfolio (and my stock club!)...Quality Systems (QSII) that is in this same general area. These particular issues are important in medical practice because they are problems faced in the conversion of hard copy medical records and results into the Electronic Medical Record (EMR).
On July 30, 2003, as reported on the NYTimes on the Web, this Milwaukee-based company reported their second quarter 2003 results: revenues for the quarter were $6,434,000 an increase of 54% over revenues of $4,183,000 for the quarter ended June 30, 2002. Net income for the quarter was $1,400,000, an increase of 133% over net income of $600,000 for the quarter ended June 30, 2002. Diluted EPS was $.12 for the 2003 quarter vs $.06 for the same quarter in 2002.
Morningstar.com also shows a beautiful (if not perfect) record of revenue growth...$10 million in 1998, $13.3 million in 1999, $12.6 million in 2000 (the hiccough), $15.7 million in 2001, $20.8 million in 2002, and extrapolating the latest quarter would get us about $26 million in revenue for 2003.
Free cash flow also looks nice: ($2) million in 2000, $2 million in 2001, $3 million in 2002, and $5 million in the trailing twelve months.
According to Morningstar.com, cash on hand is $6.6 million, more than enough to cover BOTH current liabilities of $4.9 million and the small $0.8 milllion of long-term debt. In addition, MRGE has $7.5 million of other current assets. What is there NOT to like?
This is a fairly SMALL company with a market cap of $230.77 million. The trailing p/e is moderately high at 37.75, the PEG ratio isn't bad at 1.32 (lower the better!), Price to sales is steep at 8.20. 12.15 million shares are outstanding with 9.90 million of them that float. Currently 4.34% of the float is out short or 430,000 shares...representing 2.671 trading days. No dividend is paid.
I like this stock a LOT. I guess a lot of other people do too as it is quite strong! Have a great evening and be sure to stop by again. Happy to have you let your friends know about this site....the more the merrier. If you have any comments or questions, please try to post them right here or email me at bobsadviceforstocks@lycos.com!
Bob