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Source: SeniorJournal.com
0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
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PENNY STOCK FORTUNES The relative ease of taking on additional leases and strong business ties to the Senior Housing REIT Five Star provides 63% of SNHs rent revenues are basically a best-of-both-worlds scenario as the company focuses on growth in this environment. And its one that the company benefits from on the income statement as well. While competitors often choose to defray the construction and acquisition costs of a senior living facility by selling units to residents, Five Stars residents rent its units, a fact thats insulated the company from the impact of the real estate bubbles burst. Rent income and occupancy rates havent been significantly affected by the economy in many of Five Stars major markets. The companys return on equity 13% in its latest quarter brings in proof positive that Five Star continues to deliver value to shareholders. As a result, UBS is now obligated to buy them back at par value, which actually represents a gain over the recorded book value of the ARS. Despite the presence of ARS on Five Stars books scaring off some investors, the decision to purchase the ill-fated investments looks solid for shareholders who are just getting into their positions now. As long as UBS, one of the biggest financial services firms in the world, stays in business long enough to redeem the ARS, the deal should result in a one-time gain on Five Stars income statement. Like any small-cap company right now, Five Star faces the risks of a tough economy and difficult credit market. That is mitigated somewhat by a Nov. 22 filing by Five Star that authorizes the company to sell up to $1 billion in stock and bonds on the open market in the future should the company need to meet its operating expenses. With an appetite for growth, that freedom to generate excess cash is very important for Five Star.
Trading at Cash
With a share price of $3.50, Five Star is currently a significant value play. The company is essentially trading for cash and short-term investments right now, which means that after FVE-owned properties and other assets are considered, the company is selling for a 12% discount to its book value. Part of the reason for that strong balance sheet position is the debt reduction that the company has been undertaking this year. In the last year, Five Star issued $126.5 million in bonds to increase its balance sheet liquidity amid a tough credit environment. In the months since, the company has already paid off $51.5 million of that debt, sending a strong signal to creditors. And with a trailing price-to-earnings ratio of 3.9 currently, Five Star is also priced 2.9 times lower for its income level than the rest of the health care facility industry.
Me. 23.7 Mass. 20.9 R.I. 21.4 Conn. 20.8 N.J. 22.9 Del. 25.9 Md. 25.2 D.C. 22.1
Utah 21.8
Ala. 27.3
Ill. Ind. Ohio Pa. 25.7 25.3 27.5 26.9 W.V. Mo. 30.6 Va. 27.4 Ky. 28.4 25.5 Tenn. 29.0 N.C. 27.1 Ark. 29.3 S.C. Miss. Ala. Ga. 29.2 La. 31.6 30.1 27.4 29.5 Fla. 23.3
Source: Calorie Lab
Hawaii 20.7
research in the $55 billion weight loss industry, the focus on fat has reached new levels. But while most companies focus on fighting obesity, weve found one small company thats turning Americas indulgences into cold hard cash. Heres everything you need to know to profit from the worlds fattest population According to studies from the Centers for Disease Control and Prevention, 67% of U.S. adults are overweight or obese, a number thats risen dramatically since studies in the 1970s. Unquestionably, the obesity epidemic is a problem in desperate need of a solution. On average, men and women are nearly 20 pounds heavier now than they were just 30 years ago. And the fattest Americans have gotten heavier still at present, more than 12 million Americans have a body mass index (BMI) of 40 or greater, a number that categorizes them as Obese Class III, severely obese. That weight gain has had very tangible effects on the world we live in: While we begrudgingly shell out cash for flights, complaining about the increasing cost of air travel, Americans extra weight costs the airlines an estimated $250 million each year. Specialty casket
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makers are beginning to offer jumbo-sized options for your eternal resting place. And online retailers like LivingXL.com offer things like an extended-reach Pistol Grip No-Bend Toenail Clipper for consumers who have trouble reaching their feet. One of the root causes of the obesity problem is pretty straightforward: overconsumption. Since mans early days as hunter-gatherers, weve been programmed to seek out calorically dense foods as a mode of survival. And while that worked well in a society in which physical labor was part of a typical day on the farm or at the factory, the abundance of inexpensive foods and the transition to more service-based office jobs have meant that Americans are getting a little too big for their britches. And once we get hooked on food, its hard to get off. Researchers have recently discovered that high-sugar fatty foods (like bacon cheeseburgers and ice cream) actually have addictive properties similar to drugs. In a study published in the journal Nature Neuroscience, scientists discovered that unbridled access to human junk food actually causes changes in the brain similar to those of a cocaine or heroin
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PENNY STOCK FORTUNES addict albeit on a smaller scale. Its no surprise, then, that obesity has ballooned in the last couple decades. But while scores of investors have put money on the next weight loss gimmick, relative few have harnessed the huge demand on the other side of the scales junk food stocks. become more cognizant of the impact of obesity on health, the company should see an uptick in this segment of the market. Where Inventures branding and innovation efforts fall short of better-capitalized competitors, the company has another strategic ace up its sleeve licensing. Back in 2000, the company acquired an exclusive license to produce and market snacks under the T.G.I. Fridays brand. Since then, Inventure has grown T.G.I. Fridays to more than 60% of its sales and added other national brand names, like Burger King, to its portfolio. Another major area of focus is distribution. At present, Inventures products are available nationwide, thanks to partnerships with major retailers including Wal-Mart, Sams Club and Safeway as well as a number of large independent distributors. Those partnerships also happen to be key to Inventures growth as the company looks past 2010. As with many of its competitors, Inventures profit margins currently sit in the single digits. In order to increase margins, the company needs to increase productivity and efficiency at its factory locations in Indiana and Arizona (which currently operate at just 40% and 50% of their respective capacities). To achieve that, Inventure is looking at partnering with retailers to create private label snack products. While private label brands are traditionally lower margin, they would bring plant efficiency up considerably, and lower fixed manufacturing costs for their higher-margin brands. In total, the company expects new deals to generate as much as $150 million in additional annual sales volume. Action to Take: Buy Shares of Inventure Group Inc. (NASDAQ:SNAK) for $3.60 or better
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