STOCK PICKS: Top 5 Small-Caps for Sept. 5
Management was pleased with the company's record results in the second quarter despite a difficult business environment. The company has worked to increase its global presence and overseas demand has helped offset the challenges of the U.S. market. Balchem expects rising raw material costs to continue affecting its financial results in the near term but management stated that appropriate steps would be taken to minimize the impact on operating margins and cash flow. Bear in mind, however, that global economic issues could still affect the company's results.
U.S. Physical Therapy (USPH) operates approximately 350 clinics for outpatient physical and occupational therapy. These clinics provide preventive and post-operative care for a variety of orthopedic-related disorders and sports-related injuries, as well as treatment for neurologically-related injuries and rehabilitation of injured workers. The company was founded in 1990 and currently operates in 42 states.
U.S. Physical Therapy has been rated a buy since April 2008. This rating is driven by a number of strengths, such as its strong growth in revenue, earnings per share (EPS) and income, as well its largely solid financial position and increasing cash flow from operations. For the second quarter of fiscal 2008, the company reported revenue growth of 33.6% year-over-year. This revenue growth helped the company achieve an EPS growth of 20.0% compared with the same quarter one year ago. The company has continued a pattern of positive EPS growth over the past year, and we feel that this trend should continue. Net income also increased, rising 24.0% from $2.30 million in the second quarter of fiscal 2007 to $2.86 million in the most-recent quarter. The company appears to manage its debt level well and demonstrates the ability to cover its short-term cash needs. Additionally, its net operating cash flow increased significantly in the second quarter, rising 251.85% to $6.06 million.
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