Five Star Quality Care, Inc. (AMEX: FVE) is a national healthcare and senior living services provider with more than 21,000 employees in 230 locations nationwide. There is much opportunity for the company to grow as the aging U.S. population increases demand for independent living properties, assisted living communities, skilled nursing facilities, pharmacies and rehabilitation services.
With more than a billion in annual revenues, the company trades at a market cap of $97 million, providing a price to sales ratio of only 0.09! Five Star also trades well below its Book Value per Share of $3.85. Two analysts currently believe the company is a "Buy", while one believes it's a "Hold". The average price target issued by the three analysts is $4.00.
Five Star trades at a P/E of only 3.97, which is shocking considering the growth rate of the company. As for management efficiency, the company far exceeds its competitors with a Return on Equity of 23.9%, Return on Assets of 6.5% and Return on Capital of 10.2%. The company has a solid balance sheet with $21.7 million in cash, and revenues have grown at an average of 14.2% the past five years.
Although the fundamentals of this company are very attractive at the current price, the stock is up more than 250% since April. Furthermore, the stock's RSI dipped below 70 for the first time since new highs were made and the MACD is about to cross to the downside. All of this can be considered bearish and may result in a dip. Although this alert might be a bit early, it gives plenty of time to fully research the company and truly appreciate what a gem it is.