https://thebull.com.au/reducing-risk-in-the-search-for-healthcare...

https://thebull.com.au/reducing-risk-in-the-search-for-healthcare-ten-baggers/

Reducing Risk in the Search for Healthcare Ten Baggers

AuthorBOB KOHUT 06 Jun 2021

Peter Lynch was one of the most successful fund managers of all time. He wrote three best selling books on investing and a phrase introduced in the book One Up on Wall Streetseems a timely topic – “ten bagger.”

Since the onset of the pandemic an already accelerating trend caught fire – young newcomers flooding share markets. Perhaps the early intent of many was to follow Lynch’s advice and search for stocks with the potential to return ten times the amount of money initially invested – a ten bagger. In the past few days investors around the world have watched in fascination as a subgroup of the social media site Reddit – WallStreetBets – once again copied the long employed hedge fund tactic of mass buying to drive up the price of a stock targeted by the social media followers, creating in the process not ten baggers but hundred and even thousand baggers.

Howls of protest arose from within much of the professional investment community, some of it cloaked in the garb of warnings of excessive risk.

Of course investors who take the time to learn about stock markets know there is no such thing as a risk free investment. They also know some investments are riskier than others.

One of the best risk avoidance strategies is to invest in index funds or exchange traded fundsspecialising in targeted stocks. While that approach minimises risk, it fails to get the blood pumping. Only a search for the big win – the ten bagger and beyond – can do that.

For many investors both young and old, healthcare and technology are “hot” sectors abounding in mega trends sure to enrich those bold enough to make the big bets. The aftermath of the release of successful clinical trials virtually guarantees a big upward move for most healthcare stocks. Even the technology sector cannot compete with that.

...

Alcidion Group (ALC) is a health care software services company that appears close to turning profitable. The share price is up 174% year over year and up 838% over five years. In FY 2020 the company generated revenues of $18.6 million dollars, up from $16.8 million in FY 2019. In FY 2018 the company reported revenues of $3 million dollars. Analysts are forecasting an 87.5% jump in EPS (earning per share) by FY 2023, jumping from a loss of 0.3 cents to a gain of 0.5 cents per share. Earnings per share do not guarantee profitability but this company appears to be moving in the right direction.

Alcidion has a market cap of $472 million dollars, and trades at $0.45 per share, down slightly from its 52 Week High of $0.48.

The company’s “smart technology” software solutions are in use at 322 hospitals across the UK, Australia, and New Zealand with a recent acquisition of ExtraMed in the UK making Alcidion a “leader in the UK digital market with a 19% share” according to Alcidion management.

Alcidion can customise its software solutions to match specific hospital needs. The company’s Miya Platform covers virtually all hospital operations:

• Patient Care
• Clinical
• Radiology
• Medication
• Laboratory

Alcidion also has Smartpage, a platform that uses both advanced smartphones and web-based systems for communication and task management for both clinical and non-clinical users.

On 28 April the company released March Quarter financial highlights, noting its revenue to date had already exceeded the FY 2020 total by 33%. Among the highlights in the release, this one adds to the view Alcidion is approaching profitability:

• Contracted revenue to be recognised in FY21 (excluding ExtraMed acquisition which occurred after Q3 end) of $24.7M at end of Q3 ($15.9M recurring + $8.8M non-recurring