Today's Strong And Under The Radar Stock: Healthcare Services Group (HCSG)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Healthcare Services Group ( HCSG) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Healthcare Services Group as such a stock due to the following factors:

  • HCSG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $11.8 million.
  • HCSG is making at least a new 3-day high.
  • HCSG has a PE ratio of 192.8.
  • HCSG is mentioned 0.55 times per day on StockTwits.
  • HCSG has not yet been mentioned on StockTwits today.
  • HCSG is currently in the upper 20% of its 1-year range.
  • HCSG is in the upper 35% of its 20-day range.
  • HCSG is in the upper 45% of its 5-day range.
  • HCSG is currently trading above yesterday's high.

'Strong and Under the Radar' stocks tend to be worthwhile stocks to watch for a variety of factors including historical back testing and price action. Market technicians refer to such stocks as being in an accumulation phase before a mark-up and peak. Traders and hedge funds have frequently found that these types of stocks continue to build a solid price base and then ultimately spike higher and peak when others 'discover' how good the stock is performing. By leveraging the social discovery aspect of StockTwits we are highlighting stocks that don't currently receive much attention from retail investors, but we suspect may soon garner more attention.

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More details on HCSG:

Healthcare Services Group, Inc., together with its subsidiaries, provides housekeeping, laundry, linen, facility maintenance, and dietary services to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. The stock currently has a dividend yield of 2.3%. HCSG has a PE ratio of 192.8. Currently there are 3 analysts that rate Healthcare Services Group a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Healthcare Services Group has been 359,700 shares per day over the past 30 days. Healthcare Services Group has a market cap of $2.2 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.76 and a short float of 12.1% with 22.97 days to cover. Shares are up 9% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Healthcare Services Group as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.2%. Since the same quarter one year prior, revenues slightly increased by 7.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • HCSG has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.52, which clearly demonstrates the ability to cover short-term cash needs.
  • HEALTHCARE SERVICES GROUP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, HEALTHCARE SERVICES GROUP increased its bottom line by earning $0.69 versus $0.66 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus $0.69).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. When compared to other companies in the Commercial Services & Supplies industry and the overall market, HEALTHCARE SERVICES GROUP's return on equity is below that of both the industry average and the S&P 500.
  • The gross profit margin for HEALTHCARE SERVICES GROUP is currently extremely low, coming in at 1.36%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -6.92% is significantly below that of the industry average.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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