Track Record of Success Could Mean Bigger Profits
Wednesday, April 16th, 2008
By Mitchell Clark, B.Comm. for Profit Confidential
Not too long ago, I wrote about DeVry, Inc. (NYSE/DV) which runs DeVry University, Advanced Academics, Ross University, Chamberlain College of Nursing and Becker Professional Review.
This company has distinguished itself with a long-term track record of operational growth and financial success for stockholders. Some people aren’t enthusiastic about for-profit education, but, from my point of view, it’s about as good as any business can get. Also, it’s my belief that the education business is more recession-resistant than other industries.
Another business area that can withstand a recession is specialized medical equipment. With the right set of products and an established track record, it’s difficult to go against the demographics of an ageing population and baby boomers with money to spend.
One company that stands out as a real success in this area is NuVasive, Inc. (NASDAQ/NUVA). Not only is this company successful operationally, but also the stock has quadrupled over the last four years. For me, I always like to find companies with an established track record of success — both as a business and as a wealth creator for stockholders.
NuVasive is a medical device company that designs and sells products for the surgical treatment of spine disorders. The company’s main product offering includes a minimally disruptive surgical platform called “Maximum Access Surgery,” which offers proprietary software to help avoid nerve damage, a split-blade design retraction system, and specialized implants. The company, founded in 1995, is based in San Diego.
In its fourth quarter of 2007, the company’s revenues grew to forty-seven million dollars, representing growth of 54% over revenues generated in the fourth quarter of 2006, and a 22% increase in third quarter 2007 revenues. For all of 2007, NuVasive’s revenues grew to just over one hundred and fifty-four million dollars, representing growth of 57% over 2006 revenues of around ninety-eight million dollars.
On a GAAP basis, the company had a net loss of $1.1 million, or ($0.03) per share, in the fourth quarter of 2007. For all of 2007, NuVasive generated a loss of more than eleven million dollars, or ($0.32) per share. The company finished the year with cash and investments of almost ninety million dollars and without long-term debt.
Nobody knows how long this recession is going to last. If a stock holds up well when the broader market is going down, it’s usually a good bet that it will outperform when things turn around. I like the education business right now and I like the medical equipment business as well.
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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.
