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Last week I bought a starter position in Almost Family (NASDAQ: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:

  1. 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.
  2. 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.
  3. Little analyst coverage (only two analysts).
  4. Return on equity= 28%.
  5. Growing analyst estimates for 2009. In the last 90 days, the forecasted analyst 2009 earnings estimate was raised from 1.31 to 1.67.
  6. 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.
  7. Good Sponsorship: Owned by Fidelity Lo Price (Tillinghast) and Oberweis Micro Cap funds.
  8. Will benefit from aging of the baby boomers.

Full Disclosure: I am long AFAM.

Source: Almost Family: A Growing Company That Will Benefit from Aging Baby Boomers