TRL--from the September 1999 Kiplinger's
too early, but imo still has some value
Profit from a selling panic
19 (of 20 under dollar stocks) total Renal Care Holdings
Wall Street hates surprises, and no one knows that better than stockholders of Total Renal Care Holdings (TRL, NYSE, $14). When the company announced that earnings for its fourth quarter would not meet expectations--with no hint from the company of what was to come--the stock nose-dived from about $20 a share to $7. The earnings surprise amounted to a 6-cents-a-share shortfall from the analysts' prediction of 36 cents. The firm's first-quarter earnings were right on target, and that helped restore some of its credibility among analysts who follow the company.
And while the stock's value has doubled since then, it is still cheap. Analyst John Hindelong of Donaldson, Lufkin & Jenrette points out that with earnings expected to come in this year at $1.46 per share, its P/E ratio is only 10, while its earnings-growth rate should be 20% or better in the long run. For example, analysts estimate earnings for next year at $1.75 per share, a 20% increase.
Also, to a large degree "the attractiveness of the company is based on the attractiveness of the industry," which is solid, Hindelong says. "The dialysis niche has good growth and, if you do it right, good profit potential."
Put on your rose-colored glasses |
