CryoLife: Value Stock in an Almost Recession Proof Sector

CryoLife, Inc. (CRY) is engaged in preserving and distributing human tissues for cardiac and vascular transplant applications and develops and commercializes medical devices. The human tissue distributed by the Company includes the CryoValve SG pulmonary human heart valve (CryoValve SG), processed using CryoLife's SynerGraft technology. The Company's medical devices include BioGlue Surgical Adhesive (BioGlue) and Hemostase, which the Company distributes for Medafor, Inc., as well as other medical devices. CryoLife distributes BioGlue, which is used in place of stitches, throughout the United States and in more than 70 other countries.

CryoLife is an interesting company that has been on my radar for a while now. The company has carved itself a nice niche in an almost recession proof sector and has been aggressively marketing its products. The market for BioGlue and tissue preservation services is only going to continue to grow as the population gets larger and older, and eventually the true value of the company will be recognized. My main concern is the wild rollercoaster ride that the stock price has been on over the years. That said, I do believe that the lawsuits are now behind them and that the company will continue to grow.

The company has been profitable since early 2007 and has been steadily increasing earnings and sales since then. CryoLife trades at a P/E of 5.0 and a price/book of 1.55 with a current ratio of 4.28. The company boasts a return on equity of 38.1% and a gross margin of 64.5% which is pretty impressive in the current economic climate. There was significant insider selling last fall when the company was trading at over $12 a share, although CEO Steven Anderson still holds almost 7% of the company, which I take to be a positive sign.

CryoLife currently trades at $5.82 and I would be looking for a 12-month price target of $11-12.

Disclosure: At the time of writing the author did not hold shares in CryoLife Inc., (CRY).

Comments

[Danny Furman:]

Mr. Parker
Looks like a great value with growth potential. I'm guessing you're on the fence since the stock traded at $5 a week or two ago...Me too, but thanks for the tip.
Additionally, you are the only author I see who has written about Himax, which I recently bought into. An upcoming 9% dividend for me seems likely to be 20%+ for you!
Thank you for the article, I'll be on the lookout for your next one.

Jun 11 11:46 AM

[Hondo1944:]

I have been trading CRY for over 6 years+, and I too think (Know) that it is overvalued. Cryolife was at one time trading in the 30$ range, and steadily in the 20$ range before they got involved with lawsuits. Like you said the lawsuits are now way behind them and they have learned their lesson from the lawsuits that make them better protected from them in the future I believe. Cryolife stock is day traded alot and fluctuates due to this type of trading. People like myself know that the stock is worth well over 12-15$, and but it at a average of 5-6$ or less and sell it at $12+ to take out my profit and hold shares in a free state in doing so. I believe alot of people do this type of trading and create the flucuation you speak about. The fact that the Market also took a hit recently and alot of institutional account sold alot of holdings also had something to do with a sell off. As Institutions get back into the Market I believe that CRY will be their buying choice based on our mutual belief and hold a better price range in the teens. But, again day traders have this one on their radar and can create the 5-12$ ranges over and over again.

Jun 17 02:39 PM

[Hondo1944:]

On Jun 17 02:39 PM Hondo1944 wrote:

> I have been trading CRY for over 6 years+, and I too think (Know)
> that it is undervalued. Cryolife was at one time trading in the 30$
> range, and steadily in the 20$ range before they got involved with
> lawsuits. Like you said the lawsuits are now way behind them and
> they have learned their lesson from the lawsuits that make them better
> protected from them in the future I believe. Cryolife stock is day
> traded alot and fluctuates due to this type of trading. People like
> myself know that the stock is worth well over 12-15$, and but it
> at a average of 5-6$ or less and sell it at $12+ to take out my profit
> and hold shares in a free state in doing so. I believe alot of people
> do this type of trading and create the flucuation you speak about.
> The fact that the Market also took a hit recently and alot of institutional
> account sold alot of holdings also had something to do with a sell
> off. As Institutions get back into the Market I believe that CRY
> will be their buying choice based on our mutual belief and hold a
> better price range in the teens. But, again day traders have this
> one on their radar and can create the 5-12$ ranges over and over
> again.

Jun 17 02:43 PM