Any management that puts profitability front and center deserves investor support. This is a case of a stock with twice the operating margin during the quarter ended December 2007 compared to the average for the last four quarters. The improvement comes after an increase in marketing expenses, and only 18% sales growth, which proves that the business has clamped down on unproductive overheads and expenses.
There is more: the stock presents a rare opportunity to combine financial gains with social responsibility. The business relates to the safe disposal of needles used by patients and small medical institutions. The company has invested in software to carry needles from individual patients to a central disposal facility in Texas, and to keep relevant pharmaceutical companies informed as well. It is a system with enormous safety value, and should become mandatory for the entire healthcare industry.
The management is not content to rest on its laurel of profitability improvement: it has credible plans on the anvil for business expansion. It has purchased the disposal facility which was leased until recently. Secondly, the company has invested in autoclave equipment that will improve safety standards in disposal over the present system of incineration. Finally, the management has decided to seek regulatory approval for the disposal of unused drugs that have expired. The horizontal move will mean additional revenues with only marginal increments in expenses.
It is surprising that a stock market that is so full of recession fears has taken no note of the exciting prospects presented by this company, but then discerning market observers will hardly complain about peers remaining ignorant about a treasure.
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