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Having gotten that out of the way, I found another orthopedic device manufacturer that looks interesting today. I do not own any shares of Kyphon. Kyphon (KYPH), according to money.cnn.com "...develops devices using its proprietary ballon (sic) technology for orthopedic applications. KYPH's products are used for the treatment of vertebral body compression fractures, primarily caused by osteoporosis." KYPH is having a great day, currently trading as I write at $29.15 up $3.59 or 14.05%.
On October 29, 2003, KYPH was reported by BUSINESS WIRE, and picked up by NYTimes on the Web, to release their third quarter 2003 results. For the quarter ending September 30, 2003, the company reported sales of $35.1 million compared to $20.7 million in 2002 same quarter, and net income of $4.7 million or $.11/diluted share vs ($11.6) million or ($.32)/diluted share last year.
Morningstar.com documents the rapid growth of this company from $300,000 in revenue in 1999, to $6.1 million in 2000, $36.1 million in 2001, $76.3 million in 2002, and now with the current quarter they are running at over a $125 million/year rate.
Free cash flow has improved recently from ($21) million in 2000, ($15) million in 2001, ($2) million in 2002 to $3 million POSITIVE in the trailing twelve months.
Their balance sheet is beautiful: $43.4 million in CASH, way more than enough to cover the $11.1 million in current liabilities and NO long-term liabilities. In addition, KYPH reports $57.3 million in other current assets as noted on Morningstar.com.
Looking at Yahoo.com for other statistics, we find that the market cap is now $1.14 Billion, with a trailing p/e of 137.29 and a forward p/e of 77.45. This company is priced to perfection. The PEG ratio is steep as well at 5.28. Price/sales are rich at 8.66.
There are 38.64 million shares outstanding with 16.60 million of them that float. Other investors must also think this is a bit expensive as there are 1.87 million shares out short, representing 4.151 days of average trading volume to cover. No dividend is paid.
In general, I like this stock a lot. However, you will need to pay top dollar to get shares on this one and one false step and the price is likely to be cut severely. I am not rushing out to buy shares but wish I had them some time ago!
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