Last week I bought a starter position in Almost Family (AFAM) and plan to add to my holding on price dips. Almost Family provides home health care services in the United States. It operates in two divisions, Visiting Nurse [VN] and Personal Care [PC].
The VN division provides Medicare-certified home health nursing services to patients in need of recuperative care. The PC segment provides in-home patient care on an as-needed, hourly, or live-in basis. As of December 31, 2007, AFAM operated 33 Medicare-certified home health agencies with 51 locations and 22 personal care locations.
Here are some things I like about AFAM:
- AFAM was recently added to the Russell 2000. It had a runup going into June 30, then pulled back. It now seems to be resuming its relative strength in a terrible overall market environment and should be a good stock to hold in a recessionary environment.
- The company reported great first quarter earnings:
- Service revenues up 23%, Visiting Nurse revenues up 30%.
- 17% organic revenue growth plus additional gains from rolling up acquisitions.
- Net income from continuing operations up 41%.
- Reasonable PE ratio (16 times) for a company growing so fast.
- Little analyst coverage (only two analysts).
- Return on equity= 28%.
- Growing analyst estimates for 2009. In the last 90 days, the forecasted analyst 2009 earnings estimate was raised from 1.31 to 1.67.
- Low institutional ownership (only 17%). Lots of potential upside as more institutional investors purchase AFAM which is now on their radar screen as a member of the Russell 2000.
- Good Sponsorship: Owned by Fidelity Lo Price (Tillinghast) and Oberweis Micro Cap funds.
- Will benefit from aging of the baby boomers.
Full Disclosure: I am long AFAM.