OK, so now that I’ve taken a moment to look at Investment #1 I probably could have just included it in my earlier post about the SNiP Technique teaser from Medical Investor. This is not such a tough one.
But what’s done is done … so here ’tis:
They teased two SNiP companies in the ad about the “Doctor’s Retirement Package” that was all about genetic testing and personalized medicine, and #2 I revealed in the earlier post — that’s the smaller one. But this “Doctor’s Retirement Package” (so called because they theorize that only doctors are really in the know about new medical developments, and they — through methods both upright and shady — invest in them before we know about them) intimated that there were two great companies using the SNiP Technique, and that we should buy both of them.
So we know #2 — now here are the details about #1:
It’s the “best diagnostic company in America.”
They can screen for leukemia, colon cancer, heart attack susceptibility, etc.
And here’s some text from the ad to flesh it out:
“What we love about this company is that in addition to the cutting edge SNiP Diagnostics, they also conduct millions of other routine tests (like tests for drugs, sexually transmitted diseases, cholesterol, pregnancy, and diabetes), which makes them very profitable.”
And finally, the very specific clues that send us on our way:
“The company performs 500,000 tests each night, and makes results available the next day.”
“They serve 50% of the doctors and hospitals in America.”
“income has gone up by about $100 million, every year since 2000.”
Investors have enjoyed 584% returns over the past seven years.
So if you believe, from this little tease, that “this is a company to buy right away, and hold for the next decade” … what’s the company?
Thanks to your friendly Stock Gumshoe, you now know that this testing powerhouse is …
Quest Diagnostics (DGX)
They do report that they perform laboratory tests for “over 500,000” patients every day. And they do have just about a 50% market share in the US, so those clues match.
And earnings have gone up by “about” $100 million a year, depending on how you define “about.” Decide for yourself: The earnings for 2000 to present are, in order and in millions of dollars, $314.1, $403.1, $596.1, $796.5, $8891.2, $968.1, and $1,128.1.
So they sure make plenty of money. And this is a large, $10 billion company that has exhibited very consistent growth over the last ten years or so, partly through acquisitions, and undoubtedly has a dominant market position (I have to have my tests done by them, many of you probably do as well), so it’s not like you’re rolling the dice on the pink sheets with this one … but neither are you uncovering a gem in the rouigh.
Quest’s stock has underperformed their industry for the last year or so, so perhaps it’s more of a bargain that it might have been a year ago. They’ve got a wee dividend, analysts predicting that their coming 12 months will have worse earnings than last year (though still only a forward PE of about 18, not too bad), and just by basic ratios like price/sales and price/book they’re significantly cheaper than the industry average (according to Morningstar).
But I can’t tell you anything about their connection with genetic testing — I don’t know how the SNiP technique plays into their future planning, I just know that this is the company The Medical Investor is teasing you about. Now it’s your turn: go forth, research, and let us know if it’s worth a buy, there’s definitely no shortage of information on this company in the public realm.
The only medical testing company I personally own shares in is Myriad Genetics, which makes predictive genetic tests for things like cancer susceptibility, etc., but is now being valued largely on the prospects for Flurizan, their Alzheimer’s drug (more on my other site if you’re interested — but y’all come on back now, hear?)
Personal Capital is an advertiser with Stock Gumshoe, but Travis also uses it every day for his personal accounts and finds it invaluable. Here's what he said: "They offer a great (and genuinely FREE) 'second opinion' for your financial plan, but what I love most is their automated financial dashboard -- it will look at all your assets and debts, tally up your asset allocation, project where you'll be at retirement, and suggest ways to manage risk or improve returns. It's free, I think their free tools are great, and I think it's worth checking out -- you can do so here.