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A Healthy Business Prescription from Gentiva Health Services Inc. (GTIV)

Should you buy into a stock when it is within touching distance of a 52-year price high? Conventional wisdom would suggest otherwise, but there are strong contrary indications for this small-capital member of the Healthcare Facilities Industry from Melville, NY. The stock price has surged by nearly 28% in August 2008 following a great second quarter. However, the future looks better still.

The business model of direct home nursing is most durable. Who would rather spend old age in a medical facility, rather than at home? It is not just a matter of comfort, for the company offers substantial discounts compared to the costs of living in homes for the aged. America is certainly not getting any younger, so demand for this company’s service, care-at-home, is set to grow.

Some analysts maintain that it is easy for almost anyone to enter the direct home nursing business. It is true that some 13,000 providers crowd this industry. However, the company under discussion has a large market presence spread over 36 states. It has insatiable inorganic appetite, and remains on the prowl for further acquisitions.

Specialized services buttress the stock as well. The company goes beyond run-of-the-mill home care. It offers orthopedic rehabilitation, as well as services for people with nervous and heart disorders. The management has focused simultaneously on Medicare, thus building a wholesome blend of mass and niche customers.

September 2008 has started with a price of $27.83 for this stock against a 52-week high of $28.16. The Price to Earnings Ratio remains below 22. The Beta is 0.23 and the Earnings per Share (EPS) is currently 1.27.

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