Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 50% Gains Investing -- Ignore unavailable to you. Want to Upgrade?

To: Dale Baker who wrote (12938)	12/10/1999 8:34:00 AM
From: Richard Tsang	Read Replies (1) \| Respond to of 118717

Very nice approach. I do that on my MS Money as well. I am selling FFTI and PTIX, my emotional buys and may take some profits on SARC and BITS. Will look to get in later when I get back to normal margin ratio. Way too high right now. Wow! Futures up big time! Good time to cut down. Got to go. Rich

To: Dale Baker who wrote (12938)	12/10/1999 8:58:00 AM
From: JustInTime	Respond to of 118717

News on one of my 50% gainer picks I posted here last week, USON - US Oncology (from Individual Investor): US Oncology: Poised for a Recovery Jade Liou 12/10/99 It was only last year when healthcare stocks nose-dived as Medicare spending cuts raised costs and tore into profits. But now Congress is working on legislation that will take the sting out of the Medicare cuts mandated by the 1997 Balanced Budget Act. Approximately $16 billion has been earmarked for increases in Medicare payments, with about 75% of that figure to be received by hospitals and health maintenance organizations. So healthcare looks like it?s ready to bounce back, and US Oncology (NASDAQ:USON - news) is one of the stocks that should benefit. The shares lost $0.22 on Thursday and closed at $4.56, nearly 70% off the 52-week high. The physician practice management firm acquires, develops and manages practices specializing in the diagnosis and treatment of cancer. The company builds regional networks of oncologists that provide comprehensive services under management agreements to patients with cancer. The shares were battered when third quarter earnings came in at $0.15 per share, a nickel less than the $0.20 per share consensus forecast. Sales rose 28% year-over-year during the period, from $216.9 million last year to $277.8 million this year. However, both net income and earnings came in nearly flat, due mostly to a shift in the sales mix for the quarter. Pharmaceutical revenue as a percentage of total revenue was higher than expected this quarter, versus a lower than expected non-pharmaceutical revenue. Because the pharmaceutical business typically has lower margins than US Oncology?s other businesses, the higher sales of lower-margin drugs negatively affected the company?s operating margins and thus earnings results. It?s not unusual for analysts to downgrade the shares of a company after it misses Street forecasts. In US Oncology?s case, the stock price fell more than 40% after the downgrade, but the company?s business remains sound. The shortfall in non-pharmaceutical revenue was caused by a downturn in radiation treatment volume unexplainable by clinical or competitive reasons, and is most likely nonrecurring. Treatment volume has already rebounded to normal levels for the fourth quarter. The company has sufficient capital to support its growth plan for the coming two years, with operating cash flows coming in strong at $24 million for the second and third quarters and expected to reach $90 million for 2000 ? more than enough to fund approximately $80 million in planned expenditures for new acquisitions and the construction of new cancer centers. Moreover, acquisitions are expected to add $50 million to revenue in 1999 and another $50 million to $75 million in 2000. But perhaps the most promising growth catalyst for US Oncology is the regional cancer center, an integrated network of oncologists providing a comprehensive range of services. Since cancer centers allow oncologists to keep technical fees that historically were taken by hospitals, cancer centers are typically 600 to 1,000 basis points more profitable than a stand-alone cancer practice. The company has opened an additional 17 cancer centers since the beginning of this year, which should alleviate its margin pressures as business ramps. US Oncology?s cancer centers create for the company an opportunity to lower overhead and leverage operational synergies, increasing the profitability of its physicians. Thus the high economic value of the cancer center model will no doubt add greatly to the company?s growth as more cancer centers are rolled out in 2000. With such opportunity in the business model, US Oncology?s shares are extremely cheap. ?We view this substantial share price decline as a buying opportunity,? says analyst William Bonello of US Bancorp Piper Jaffray. US Oncology is significantly undervalued, and on Thursday, the stock was trading at a 40% discount to its $7.89 book value and a 32% discount to Bonello?s 12-month price target of $7. For the upcoming fourth quarter and next year, US Oncology plans to implement programs to deal with lower pharmaceutical margins and expects to realize about $12 million in merger-related synergies, which should alleviate some of the stress caused by third quarter results. Bottom Line: The key to this stock lies in the economic value of the cancer center business model, which could easily translate into financial value for investors.