recent thoughts - 6 months ago this stock was ~$6 CADtell me this - what has changed fundamentally with the story since then? nothing. the company continues to acquire and continues to meet (or beat) street expectations across almost all metrics. case revenue has stabilized with no apparent CMS cuts on the horizon. case growth, organic and through acquisition, is on an upwards trajectory. the demographic story is still there - aging population, increased focus on GI screening, etc.
institutional ownership is on the rise and i personally think that was the reason for the spike after Q2 earnings in Sept/2018 - the investment community realized that the CMS sell-off was overblown and that CRH has weathered the storm. this stock is somewhat thinly traded - look at the low volume the stock has drifted down on post Q4/FYE earnings (which were solid). i am curious to see what Q1 (March 2019) institutional ownership looks like - we will know 45 days after quarter end. i bet it hasn't changed much at all. to me, this downtick has been fueled by retail shareholders and a spike in short sales (refer to
https://shortdata.ca/stock/CRH.TO/)
i think people need to take a longer term view on this stock. and by that i mean multi-year view. it's just going to keep chugging along, making acquisitions, and producing high margin cashflows. the company has a very healthy balance sheet and the shareholders equity isn't going to $0. the NCIB (buyback) somewhat sets a floor on the share price.
finally - there is no question that surpassing ~$100MM in Revenues per year puts CRH on the acquisition radar for a bigger company. the company's low leverage also opens the possibility to an upsized credit line to fuel more acquisitions, a restructure of its credit facility (lower pricing, lower interest costs), or a big acquisition like when they first did GAA. there is a reason this small cap stock has such a wide following of analysts - they want investment banking business and CRH is absolutely ripe for M&A work.
to me, there are very few risks here aside from i) reimbursement risk or ii) the inability to execute on the acquisition gameplan by management. these are real risks, no question. there are so many stocks out there that simply don't make money, have an unhealthy amount of debt, or trade on unreasonable expectations that won't come to fruition. that's not CRH. i also don't think it's a value trap - there is clearly real growth potential here which has been proven out.
so let's hear some compelling arguments otherwise. there aren't a lot of holes to poke in this story.
investing is all about finding mis-priced stocks and i think CRH is absolutely one of them.