The Motley Fool

Why Lifehealthcare Group Ltd still looks a buy despite its recent 20% rise

An article by Motley Fool writer/analyst Mike King first drew my eyes to Lifehealthcare Group Ltd (ASX: LHC) with this article back in January.

After doing further research myself I bought into the company at $2.14 and despite its slow start to life as a publicly traded share, I’m pretty pleased with its performance since (cheers Mike!).

Since then, Lifehealthcare has featured in the occasional article and was Mike’s ‘Best Buy’ recommendation for September even after its recent price rises.

Having risen only 9.6% since its launch, Lifehealthcare’s initial foray into the market was unremarkable to say the least, however investors have finally twigged to the potential of this company, sending it up a further 20% since the last week of August.

In addition to strong macroeconomic drivers for the healthcare market, here are a few of the highlights of the recent annual report:

  • Successfully met prospectus forecasts
  • Sales revenue rose 13.2% to $87.2 million
  • NPAT up 7.5% to $7.2 million
  • Net debt down $3.7 million to $20.3 million
  • Final dividends of 7.5 cents per share
  • Outlook for further year-on-year growth in 2015

Furthermore Lifehealthcare continues to target new markets for further diversification of its offering which, when combined with forecast growth in its existing markets of 7.5% a year should see the company delivering very strong long-term returns to shareholders.

Furthermore net profits attributable to security holders were worth around 42 cents per share in FY2014, leaving plenty of scope for the company to increase dividends or begin paying an interim dividend in FY2015.

Even at today’s prices Lifehealthcare’s final dividend is worth a reasonable 3%. An interim dividend of just 5 cents next year would take the company’s payment up to a healthy 5.1%.

Combined with healthy revenue and target market growth forecasts, Lifehealthcare could be just what the doctor ordered to put the life back in your portfolio.

5 stocks under $5

We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.

And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

*Extreme Opportunities returns as of June 5th 2020

Motley Fool contributor Sean O'Neill owns shares in Lifehealthcare.

Related Articles...