Aim Health Group Inc. on the verge of a move higher

May 27th, 2011 – Comment

If you are comfortable with the risk associated with a microcap company then I would say that AHG is on the verge of moving higher.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Good Morning Lou,

Thank you for the information regarding bankrupt companies in Canada.

I would like to get your opinion regarding a small cap stock in the health care industry. The company is Aim Health Group Inc. Symbol AHG.

Thank you

Monte

 

Hi  Monte,

Always happy to help investors with a bit of research. My old college pal Richard Babcock used to call me a data freak for my propensity for sifting through information looking for an opportunity. I hope you found what you needed with the bankrupt companies links.

Now as to your interest in AIM Health Group Inc. ( AHG TSXV). Its a great opportunity to review the process I have been using in my Business Communications students at Sheridan. The first step is always to look at the chart. That will give you a visual picture of what has been going on with the company. Its either a good news story, a bad news story, or a story in transition.

The second step is to use the tools available on globeinvestor.com to examine information about the company. You should always review the financial information available. Earnings that beat the street on a consistant basis will generally support an uptrend, profits that miss the street will typically send your invested capital to lower levels, and income after one time items that  meet the street will in most cases lead to a move sideways.

The third step is to check out the news stream to see what the company has to tell us through its news releases and what business news organizations have reported about the company. Finally you need to know what you are dealing with. You referred to AHG as a small cap stock. The range for stocks that are considered a small cap is between $300 million and $2 billion in market capitalization. With a market cap of about $19 million the company is a microcap which implies a higher level of risk.

Lets go through the process and get an idea of what is we might expect from AHG.

The three year chart depicts a story in transition. The shares have been range bound for the last year with resistance at $0.17 and support at $0.10. The choppy nature of the chart calls for a review of how the stock has been trading.

If you go to the Chart tab on globeinvestor.com you will see that these shares can go days without trading. It didn’t trade for sixteen out of the last thirty days. The average daily volume of 35,348 for the last three months was only exceeded in six of the fourteen days it did trade over the last thirty days. In summary, not a very liquid stock, which again ups the risk profile on the investment.

The six month chart provides a close up of the recent activity in the stock. The stock caught a bounce in May of 2011. That called for an examination of the news stream which you can access under the News tab on globeinvestor.com. On May 05, 2011 the company reported that it had engaged Canaccord Genuity Corp. to initiate a strategic review. A strategic review is code for ” We Can’t Keep Going On Like This!!!”  What you can also see from the news stream is that AHG doesn’t communicate much. As we used to say in Calgary,” If you want to sell a book – you have to show a book”. You have to tell to sell!

From my review of the financials they generate revenue and have earnings. Not aggressive revenue or robust earnings but revenue and earnings none the less! What I also noted when looking under the Analyst Ratings tab on globeinvestor.com was that the company has no analysts covering them. AHG isn’t  under the radar, it is under the sonar!

From the information that I have gleaned from the process I see a microcap which operates in the health and wellness area, that has revenue and earnings, but has been poor in telling its story to investors. The strategic review that it has begun with Canaccord should rectify that problem. If you are comfortable with the risk associated with a microcap company then I would say that AHG is on the verge of moving higher.

Happy Capitalism!

Categories: Health Care
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