Strong And Under The Radar: Cantel Medical (CMN)

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 Cantel Medical ( CMN) as a strong and under the radar candidate. In addition to specific proprietary factors, Trade-Ideas identified Cantel Medical as such a stock due to the following factors:

  • CMN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $8.8 million.
  • CMN is making at least a new 3-day high.
  • CMN has a PE ratio of 48.
  • CMN is mentioned 1.32 times per day on StockTwits.
  • CMN has not yet been mentioned on StockTwits today.
  • CMN is currently in the upper 20% of its 1-year range.
  • CMN is in the upper 35% of its 20-day range.
  • CMN is in the upper 45% of its 5-day range.
  • CMN 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 CMN:

Cantel Medical Corp. provides infection prevention and control products and services in the healthcare market. The stock currently has a dividend yield of 0.2%. CMN has a PE ratio of 48. Currently there is 1 analyst that rates Cantel Medical a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Cantel Medical has been 125,300 shares per day over the past 30 days. Cantel Medical has a market cap of $2.2 billion and is part of the health care sector and health services industry. The stock has a beta of 2.09 and a short float of 2.8% with 4.69 days to cover. Shares are up 20% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Cantel Medical as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, robust revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • CANTEL MEDICAL CORP has improved earnings per share by 20.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CANTEL MEDICAL CORP increased its bottom line by earning $1.05 versus $0.96 in the prior year. This year, the market expects an improvement in earnings ($1.14 versus $1.05).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Health Care Equipment & Supplies industry average. The net income increased by 20.6% when compared to the same quarter one year prior, going from $10.25 million to $12.36 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 21.9%. Since the same quarter one year prior, revenues rose by 17.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CMN's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels.
  • 49.60% is the gross profit margin for CANTEL MEDICAL CORP which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 8.73% trails the industry average.

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