Wednesday, April 6, 2011

Continucare - 7.8%

When I first heard of Continucare, it hit me like a thunderbolt.  I started reading about this company everywhere one night. Everyone loved it, its numbers were very appealing, small cap, good cash/debt ratio, strong earnings.  Priced in the min 4's, I saw it going to $5.50 very soon and bought up a block.  Almost immediately it dropped to $3.60.  I had a flash of irrational paranoia regarding conspiracy theories, articles planted to scam poor suckers like me, and the cast of "Boiler Room" laughing at me behind my back. However, seconds later, cooler heads prevailed and I bought a second block twice as large as my first.  More than a year and a half later, Continucare trades in the $5.30 range and I see it hitting $6 quite easily in the mid to short term.

Based in Florida (another selling point - low tax base), Continucare operates 18 primary care facilies, offering outpatient services to Florida's aging population.  Having gone public in 1996, Continucare recently switched from being listed on the AMEX to the NYSE. 

At my time of purchase, "Pelosi-care" was being pushed down our throats, and it wasn't clear whether it would make it through or not.  Health care stocks were, in my opinion, under-priced because of the uncertainty, and Continucare was positioned to be unaffected regardless of the outcome.  Since that time, the company has used its excess cash to purchase sleep research facilities throughout the U.S. which does not really excite me, but I still believe this stock is on an upward trajectory.

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