Still Prefer Eye Care
Wednesday, October 25th, 2006
By Mitchell Clark, B.Comm. for Profit Confidential
There are many signs that this economy is slowing. Wall Street wants it to slow so inflation doesn’t get out of control, but the trick is not slowing it too much so that we fall into a recession or stagnant growth.
For quite some time, I’ve scribbled about different investment themes that I liked, and I continue to like the eye care industry as an attractive area for investment. One of the most successful companies in this industry is a laser-eye surgery company called LCA-Vision (NASDAQ/LCAV).
Over the last three years, the stock has quadrupled on the NASDAQ. Now, the company is feeling the effects of a slowing economy. There is one certainty in this world–when the economy slows down, consumers reduce their spending.
Due to the significant cost involved, if one was thinking about having corrective laser-eye surgery, you might just put that off another year if the slowing economy was affecting your income. This is precisely what is happening to LCA-Vision now. The slowing economy is taking on a tool on growth.
This isn’t to suggest that the company isn’t growing at a healthy pace. The company just announced that it expects its revenues in the second half of this year to grow by 25% to 30%. The company’s earnings outlook, however, has been reduced and the stock was hit hard on the news.
So clearly, there’s no escaping the tough cards that the economy can deal you. This is why the Federal Reserve will have to seriously consider reducing interest rates in early 2007, or risk putting the whole economy into the dumper.
If a successful, well managed company like LCA-Vision is reducing its growth outlook, you can bet that there are all kinds of other companies and industries that are experiencing trouble right now.
I still believe in the eye care industry as a great long-term sector in which to invest. No industry, however, can escape the effect of a slowing economy.
Next Post: Oil Sands Takeover Rush?
Previous Post: Is this Stock Really Worth $100,000?
Tags: economic analyis, interest rates
Tweet
Sign Up for PROFIT CONFIDENTIAL and
receive a FREE copy of our exclusive report:
"A GOLDEN OPPORTUNITY FOR STOCK MARKET INVESTORS"
We respect your privacy and
will never share your e-mail address.
Mitchell is a Senior Editor at Lombardi Financial specializing in small-cap stocks. He’s the editor of a variety of popular Lombardi Financial newsletters, such as Penny Stock Reporter, Micro-Cap Stocks, and Monster Profits. Mitchell, who has been with Lombardi Financial for thirteen years, won the Jack Madden Prize in economic history and is a long-time student of equity markets. Prior to joining Lombardi, Mitchell was as a stock broker for a large investment bank. While Mitchell is not working he enjoys fly fishing, motorcycling and tending to his hobby farm.
