toolboy2 (98.05)

The Ascension of Transcend

September 03, 2009 – Comments (0) | RELATED TICKERS: TRCR , QSII , CPSI

Whether we like it or not, healthcare will change dramatically in this country in the next decade.  New transcription technologies will be mandated and required in order to create a more efficient and seamless medical history for patients and their doctors.  With the human population growing larger and older every year, well-managed companies in this industry such as Transcend Svcs., CPSI and Quality Systems should thrive.

Transcend currently sports phenomenal growth rates compared to the industry as a whole (41.7% yearly Qtr/Qtr sales growth vs. 13.7% for industry).  Their profit margins also blow away industry averages (17.4% operating margin vs. 0.4% for industry).  Of course, these strong stats result in a somewhat hefty premium being placed on Transcends valuation.  Trading at an 18.7 price to cash flow ratio, the stock is a little too rich for my blood.  Any pullback into the $11-12 range would pique my interest again (wish I'd researched TRCR a few years ago!)

 Disclaimer: I currently own shares in TRCR and QSII.