Almost Family Inc. Trading Under the Radar

| About: Almost Family (AFAM)

Almost Family, Inc. (NASDAQ:AFAM) is a regional provider of home health nursing services. The Company operates through two business segments: Visiting Nurse [VN] and Personal Care [PC].

The VN segment provides skilled medical services in patients' homes to enable recipients to reduce or avoid periods of hospitalization and/or nursing home care. The PC segment services are also provided in patients' homes. These services (generally provided by paraprofessional staff, such as home health aides) are generally of a custodial rather than skilled nature.

The Company has service locations in Florida, Kentucky, Ohio, Connecticut, Massachusetts, Alabama, Indiana, Illinois and Missouri. During the year ended December 31, 2006, the Company acquired 24 visiting nurse branch locations. In June 2006, the Company acquired the assets and business operations of Baptist Home Health Care, a Birmingham-based home health agency affiliated with the Baptist Health Care System of Alabama.

Here is a company growing EPS at a 100%+ clip and revenues by 50% (27% organically), is a very small cap company and is in a growth industry as more people are getting older then ever before. The stock is valued on my estimates at about 14x this year's earnings and I consider that a conservative number. That is calculated by Q1 of .30 Q2 of .35 Q3 of .38 and Q4 of .40 calculated by their previous growth rates if they slow a little (in reality they are not slowing they are speeding up but I wanted to stay conservative).

Now, the scary part: if you calculate the value of the company's shares solely on the organic growth rate of 27% (even though they are currently growing much faster then that), you get a share price of $38.61 using a PEG of 1 (1 times the growth rate).

I love finding unloved under the radar stocks where my target price is more then double where it is currently trading.

There is of course risk involved with such a small company executing on its business plan, the lack of transparency I currently have with the management of the company (which I will be working more on), and a market that hates every company that is not a big multinational (small caps are now negative for the year). The stock may languish for awhile or take some steep hits because it is so easy to move (only 5.5 million shares out), so you of course need to still heed caution.

This one is just too good not to take a speculative chance on.

Disclosure: Author is long AFAM