SXC Health Solutions Corp. (USA) (NASDAQ:SXCI)

Buy out target

Maintaining the momentum from a year ago and supporting it with continued revenue and earnings growth. Owned some since a year ago and still do.

Would still like to snatch some up... Going strong

Good 3 Yr EPS & Revenue Growth.

This is a small/mid cap high growth stock that should outperform the S&P during the bull market.

With the recent market moodiness, I was poking around the screener, taking a look at companies with a high cash/share value. The idea was to find high-growth, low-debt, high-performing companies that are well insulated from a double-dip recession, or could use their excess cash for either stock repurchases, or acquisitions, should the recession drag on, or turn worse (double-dip, or full-blown depression). The screen I used was:
Cash Per Share: $8.00+
Rev. Growth Rate (last 3 Yrs): 20.00+
EPS Growth Rate (last 3 Yrs): 8.00+
Current Ratio: 2.00+

Interestingly, I got a lot of past Rule Breaker picks in the list, and a few new ones I've never come across, including this one. Summary: this company is well insulated against risk, and has a solid, three-year track record.

SXC Health Solutions provides pharmacy benefit management services and similar healthcare benefit management IT stuff. Market Cap is 2.2 billion. This was a Pay Dirt pick back in 2007 and has been a 4 bagger since then. In the Pay Dirt final issue, Jan 2009, Jim Gillies called it as "a happy long-term hold". SXCI seems to have digested its acquisition of NMHC and profit margins are back up.

Quoting from Rich Smith Jan.19, 2010 Fools article: "Why would a rival want to own SXC Health Solutions? More importantly, why should you want to own it? I'll give you a couple-few reasons.

First, there's the cash. SXC generated $61.5 million in free cash flow over the last 12 months -- Fool-y 71% more cash than it reported as "net income" under GAAP. So while bears will argue the stock looks pricey at a 35 P/E, I'm with TexasLonghorns on this one, taking the more bullish view that the stock sells for only 23 times its free cash flow. (And when you subtract out the firm's $273 million in net cash on the balance sheet, the stock looks even cheaper.)

Second, there's the growth. As several of our CAPS members have pointed out, health care is destined to grow as an industry -- and SXC has already grown a lot as a company. Profit growth has averaged nearly 28% per year over the last half decade, and most analysts expect to see it continue at a 20% clip over the next five years."

historically, a focused, well disciplined company; grew steadily in Canada and then expanded into the US where it has increased revenues reasonably well. Expensive on a P/E basis but the growth seems to be long-term. Expect someone will buy it eventually

healthcare IT is hot and will remain hot

1% of the IBD 100.

The stock is in the midst of a high volume breakout, and has what appears to be virtually limitless room to run if it clears $21.60. There has been clear buying pressure since Nov. 13, 2008. Fundamentally, the firm should benefit from the new administration’s commitment to digitizing health care records – this explains the timing of the buying pressure.

quick four day runup

Healthcare effiicencies are inevitable and SXCI delivers the necessary mangement tools. Likely that post 2008 elections will trigger healthcare reforms and budgetary commitments.

Buying a company over 6 times your size, which lost money over the last year, rarely benefits shareholders over the long term. Given the debt load and uncertain nature of the combined company's cost savings and growth, SXC is definitely too risky to be a 5 star stock.

An aging population & more outsourcing of benefit management can only mean growth in this sector & SXC is better positioned than many of the other players to benefit from this. Good company.

They're drug dealers.

Healthcare is always a strong industry

With a tech advantage the established players have yet to match, and a sneaky :) Toronto Venture Exchange listing, SXCI has won several major government contracts and is going for several more. Either a more established player will buy them out, or SXCI will continue to undercut the big guys on price....thereby winning more contracts and making more money.