Our first idea is a healthcare company that beat analysts’ estimates by $0.02 last quarter. It has grown at more than 20% annually for the past five years. Our second recommendation is some profit-taking.
Buy: Acadia Healthcare (ACHC)
From Upside
Acadia Healthcare (ACHC) is a leading provider of behavioral health services, operates nearly 600 facilities with some 18,000 beds in 40 states and the U.K. The company offers substance-abuse programs and treats mental health disorders, including anxiety and depression.
A large market, coupled with increased awareness of mental illness, bode well for growth. A highly fragmented industry provides a pipeline of acquisition candidates, while improved profit margins and a growing bed count should help drive near-term results. Acadia plans to add more than 800 beds in 2018.
Analyst estimates for 2018 have risen in the past 60 days, with the consensus projecting per-share profit growth of 13% on a sales gain of 8%. The stock seems reasonably valued at 17 times projected earnings of $2.60 per share, reflected in a Quadrix® Value score of 83.
Acadia is being initiated as a Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, July 2, 2018