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Earlier today I sold a portion of my Starbucks stock at a 90% gain...thus I was able to add a position to the portfolio. I didn't waste any time :). Scanning the lists of greatest % gainers I came across American Healthways (AMHC). AMHC closed at $24.11 today, up $3.86 or 19.06% on the day. According to the Yahoo Profile, AMHC "...provides specialized care enhancement and disease management services to individuals in all 50 states, the District of Columbia, Puerto Rico and Guam."
Yesterday, after the close of trading, AMHC reported 3rd quarter 2004 results. Revenues for the quarter ended May 31, 2004, increased 56% to $65.4 million from $42.8 million the prior year. Earnings per diluted share jumped 57% to $.22/share from $.14/diluted share in 2003 same quarter. In addition, AMHC RAISED GUIDANCE for the rest of 2004. These are ALL great results. As I posted previously, after selling a little SBUX on a gain, I was looking for a new position, and DID buy some AMHC earlier today!
If we examine the "5-Yr Restated" financials on Morningstar.com, we can see that revenue has grown nicely from $50.1 million in revenue in 1999 to $196.0 million in the traiiing twelve months. (With the latest quarter over $60 million, this company could have a revenue nearing $250 million for 2004). Earnings dipped to $.01/share in 2000, and since then have steadily increased to a recent $.56/share in 2003.
Free cash flow, while not steadily growing, HAS stayed steadily positive with $6 million in 2001, and $11 million in 2003. The balance sheet appears adequate, with $29.3 million in cash and $45.1 million in other current assets, easily covering the $34.9 million in current liabilities, but not enough to cover the $59.5 million in long-term liabilities as well.
How about valuation? Looking at "Key Statistics" on Yahoo, we can see that the market cap is a SMALL $784.47 million, the trailing p/e is a bit rich at 43.17, but with the fast growth rate the forward p/e is only 24.84 (fye 31-Aug-05). Thus, the PEG is downright cheap at 0.83.
Yahoo reports 32.56 million shares outstanding with 28 million of them that float. Interestingly, as of 5/10/04, there were 7.61 million shares outstanding representing 27.18% of the float or 13,329 trading days. THAT is a LOT of short shares out there....and we MAY be in the midst of s SQUEEZE as the short sellers scramble to cover. There are no cash dividends reported on Yahoo....but the stock DID split 2:1 on 12/22/03.
Looking at a "Point & Figure" chart for AMHC,
we can see that the stock has been trading lower between late 2002 and April, 2003, when it dropped from $18.50 down to about $6.00. Since then, the stock has been trading higher fairly steadily.
So what do I think? I actually LIKE this company....so much that I BOUGHT some stock! The valuation is reasonable, they are growing their revenue and earnings rapidly....it just looked like a good idea to me!
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