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Healthcare Services Offers Growth, Income

Posted
8/5/2013 6:25:00 PM
By: Investor's Business Daily
Referenced Stocks:HCSG

Growth and income are not mutually exclusive.Healthcare Services Group ( HCSG ) is a prime example.

The Bensalem, Pa.-based firm provides laundry, housekeeping, food and maintenance services to hospitals and senior-living facilities.

According to the Administration On Aging, the number of people age 65 or older is expected to grow to 72.1 million by 2030, up from 39.6 million in 2009. This bodes well for the company.

Healthcare Services Group has delivered double-digit earnings and sales gains in most years since 2000. It has a five-year Earnings Stability Factor of 5, indicating a steady stream of profits.

The firm has grown organically and through buyouts. Last month, the company agreed to buy nearly all of the operating assets of privately held rival Platinum Health Services for cash and stock.

Analysts polled by Thomson Reuters see profit rising 26% to 82 cents a share this year. Earnings are expected to grow 13% to 93 cents a share in 2014.

Aside from growing its bottom line, Healthcare Services Group has rewarded shareholders with cash dividends since 2003. Unlike many companies that only raise their dividend once every few years, Healthcare Services Group has lifted its payout for 40 straight quarters, albeit in small increments, since it first started paying dividends.

The firm currently pays 16.88 cents every quarter or about 67.5 cents a year. It has a yield of about 2.7%, which is larger than that of the S&P 500.

Healthcare Services Group has formed a cup-with-handle base with a 26.02 buy point. The stock reset its base count in late April after breaching the low of a prior base, making the current pattern a first-stage structure.