Small Cap Ideas

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>>> Addus HomeCare - >>> 3 Small-Cap Stocks With Big-Cap Potential
These stocks are just temporarily inconvenienced large caps in the making.


Motley Fool

by Alex Carchidi

Sep 25, 2020


https://www.fool.com/investing/2020/09/25/3-small-cap-stocks-with-big-cap-potential/


With a market capitalization of $1.4 billion, Addus HomeCare (NASDAQ:ADUS) provides nursing and hospice care support for elderly people who would otherwise need to be taken care of in a nursing home or hospital. While its profit margin is narrow at 4.2% and its ROIC is a mere 6.1%, the company is growing its quarterly earnings at a rapid rate of 30.5% year over year, and it seeks to grow its revenues by at least 10% per year. The most important thing to realize about Addus is that its growth is sustainable -- the company has been in business for more than 40 years, and it currently employs more than 33,000 people across the U.S.

As long as people continue to grow old and need care, Addus will be able to expand its business, making it a significantly more reliable stock than many others in the healthcare sector. This means that the company can most likely become a large cap by continuing with its business as usual -- a highly favorable state of affairs for cautious investors. From 2015 to 2019, the company boasted a compound annual growth rate of 18.9%. In 2020, it reached $736 million in trailing revenues. What's more, Addus expects that demographic trends in the U.S. will heavily favor its expansion, with its target customer numbers doubling between now and 2050. While it may not be a competitor in a hot market, Addus is on track to become a monster stock one year at a time.

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