RE:RE:Long term, this price is a giftSteelfan26, I hope the investment works out for you.
I think there are some posters on this board that are clearly short, and others who are in for the long haul. Curiously, I think both are correct for the time being. Short term, maybe more pain, as those who can't stop looking at the price decline tap out. Then, there are the longs, who are buying for long haul. Me? Definitely long. While the stock price is not performing, here's why I think it's a great business to own:
Healthcare sector in a growing/aging demographic. Macro Trend is growing not shrinking.
Good margins, even after the rate decline, likely still high 40% range.
The O'Reagan hemroid product is the door opener. This is so brilliant: It's what they use to generate their target acquisition list. In other words, hemroids and colonoscopy happens in the same clinic. If you're already selling them the hemroid banding product, you already have a relationship with the clinic to discuss acquiring them.
They can acquire with existing cash flow and very little debt, no stock dilution. They have a 100m line of credit so they can likely go after bigger clinics now.
No competition, nobody else has the same game plan in gastro (to my knowledge).
Not the same as Valeant or Concordia failed roll up strategies. Those roll up strategies didn't work because they used too much debt and the nature of their drug businesses was too general. Drugs, in all different areas. No good. To do a roll up acquisition strategy you need targets that do the exact same thing. Gastro clinics are nice and specific, just that. Predictable revenue, margins, earnings, cost to acquire.
On that point, PE ratio on the stock always looks way too expensive but it isn't. It's a trailing number and they are always acquiring, so revenue is always more and earnings are going to be more than what shows up. By the time they report, they're already on to another's target, boosting their numbers even more.
The network effect. What works in one clinic usually works in all clinics. This means goodwill on the accounting statements should go up. You can roll out new products, new services, raise money cheaper, test things, etc. The bigger the network, the larger the hidden value.
With the shorts winning at the moment, it's discounting the price for those of us confident in the future of CRH. When shares go on sale like this, pull out your wallet and buy!
Ask yourself, are you a stock trader or a business owner? If you're a short, then you're a trader, you need action and activity. If you're long, you trade less frequently and you like to spend your time reading about the business that you own and how management is doing for you, the owner.
So all in all, a great business to own and add to your portfolio in my view. Solid management, talented medical men and honest. At least I think...watch them closely. They're probably alright.
GLTA