Small-Cap Gem

Wondering how to play the market as all of the Baby Boomer generation retires? I’ve heard numerous pundits mention everything from casinos to retirement homes, hospitals and pharmaceuticals as bullish investments in the midst of the ever growing population aged 65 and older.

My play is a little known, lightly traded stock that I've been following for a few weeks now. It’s called Healthcare Services Group, Inc. (NasdaqGS:HCSG), and this chart looks absolutely beautiful. I'm showing the 5 year chart to illustrate the true run this company is having:

Yahoo! Finance’s description of the company: “Healthcare Services Group, Inc. provides housekeeping, laundry, linen, facility maintenance, and food services to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States and Canada.”

Bullish case:

• I believe HCSG warrants its 34 P/E – there is so much growth in this industry, as we’re just starting to see the wave of Boomer retirement.

• Acquired Summit Services Group, Inc. in September, 2006.

• They’re due for another 3:2 split, just like they’ve done numerous times in the past.

• Increased dividend to 2% on 1/23/07.

• Upside surprise looking at the trailing 4 quarters.

• Absolutely NO debt

I would not be surprised to see some firms initiating coverage and/or upgrading the stock. I intend to start a position on the next dip and see strong potential in both healthcare and service stocks.

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This commentary is for informational purposes only and is not a recommendation to buy or sell any security.