Healthcare Services Group (HCSG) Showing Signs Of Being Strong And Under The Radar

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.

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 $12.9 million.
  • HCSG is making at least a new 3-day high.
  • HCSG has a PE ratio of 92.8.
  • HCSG is mentioned 0.90 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. provides management, administrative, and operating services to the housekeeping, laundry, linen, facility maintenance, and dietary service departments to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. The stock currently has a dividend yield of 2.4%. HCSG has a PE ratio of 92.8. 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 389,700 shares per day over the past 30 days. Healthcare Services Group has a market cap of $2.1 billion and is part of the services sector and diversified services industry. The stock has a beta of 0.72 and a short float of 11.5% with 18.53 days to cover. Shares are down 4% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Healthcare Services Group as a buy. 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, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 1.0%. Since the same quarter one year prior, revenues rose by 13.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the 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 2.82, which clearly demonstrates the ability to cover short-term cash needs.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Services & Supplies industry. The net income increased by 6.0% when compared to the same quarter one year prior, going from $14.64 million to $15.52 million.
  • HEALTHCARE SERVICES GROUP's earnings per share improvement from the most recent quarter was slightly positive. 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 reported lower earnings of $0.32 versus $0.69 in the prior year. This year, the market expects an improvement in earnings ($0.98 versus $0.32).
  • The gross profit margin for HEALTHCARE SERVICES GROUP is currently extremely low, coming in at 14.98%. Regardless of HCSG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, HCSG's net profit margin of 4.36% compares favorably to the industry average.

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