MD
Brought Some MD At $7.59 Average. here is what I like. It is also one of my picks in the Pick 4 Contest #20.
MD is a turnaround Idea. MD is executing a cost cutting strategy which will really benefit the number in the 2nd half and beyond, as they are finally starting to get costs under control here.
MD earned .20 adjusted in seasonally weak q1, based on guidance of 200-220 million in EBITDA, with q2 guidance representing about 25% of those points to earnings of around .32-.35 adjusted. I fully expect q3 and q4 to be about .80 combined. Giving us a total of about $1.30-1.35 this year, which put us at about 5.5 times this year numbers if those numbers are correct. I expect next FY to be about $1.50-1.60 as cost cutting will benefit the 1rst half, with slow but solid revenue growth going forward. The comps will start to look good in the 2nd half, considering the stock at this point is so low that is basically the matches the lows of the covid shutdown, it is not exactly priced for perfection.
MD will never get a high PE, but I can make a case for 8-10 rather easily. If you believe they will earn $1.50 next year and give the lowest pe I still think the stock is worth $12. Of course, I could see a scenario where it is easily worth $15-16 in a year which would be a double essentially from here.
Conclusion: MD is a healthcare stock that is oversold, and is at essentially the covid shutdown lows. I believe the comps will start to turn positive in the 2nd half thanks to the cost cutting and them finally getting a handle on costs. And I believe they receive a much better valuation as well as I expect earnings to start growing again thanks to modest revenue growth combined with a solid cost cutting plan. I see a decent possibility this stock could come close to if not double in the next year, assuming they hit their numbers. Which is always and if. There are no guarantees in anything, but I like the chances of this turnaround and the valuation I’m getting on this stock I find super appealing at this point. Time will tell. I will add more on weakness. All is just my opinion, and I could always be wrong though.
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