Forterus Inc. is engaged in diverse business activities, including drug and alcohol rehabilitation, and finance. The company maintains an intensive outpatient program in conjunction with sober living facilities. Hythiam, Inc. (HYTM) is a notable publicly traded company that would be considered comparable to Forterus.
On 1/22/10 after the market closed, FTER announced their 2009 fiscal year results. See below for the highlights:
- $383,937 in Net Income for Fiscal 2009 compared to a loss of $1,671,525 in Fiscal 2008.
- $5,842,182 in Revenue For Fiscal 2009 compared to revenue of $4,089,139 in Fiscal 2008.
- 435% increase in Net Income from Fiscal 2008 to Fiscal 2009.
- 43% increase in Revenue from Fiscal 2008 to Fiscal 2009.
- 0.43 Revenue Per Share (on share count of 13,513,264).
- $0.03 Earnings Per Share (on share count of 13,513,264).
As shown above the company reported a consolidated net profit of 383,937 or $.03 per share. With FTER.PK closing at $0.065/share on 1/22/10, the trailing PE is a ridiculously low 2. The CEO is quoted as saying, "We will continue to make strategic investments in qualified and experienced staff, the major asset of any quality organization, to complement the investments to grow our bed count as we continue on a sustainable, scalable and profitable growth path in fiscal 2010." He also mentioned that the company was able to weather the economic storm of last year because they had insurance contracts that provided steady revenue. I believe with these results most investors and traders will conclude that this stock deserves to trade at a much higher multiple. Right now, the current market cap for FTER.PK is less than $1 million. Hythiam, Inc. currently has a market cap of approximately $30 million. It is an understatement to say that Forterus is undervalued.
On 12/31/09 FTER.PK had a share count of 13,513,264. The float is only about 5 million shares. With a stock this inexpensive and a float this low, there is a very high probability that this stock will move much higher and at a very rapid pace.
See below for a chart of FTER.PK:
As you can see the stock has been quietly trading in the 5 cents range the past 4 months. The past couple of days, Forterus has traded higher on increased volume. This action is often a precursor to a significantly higher move. FTER.PK has a 52 week high of about 10 cents. With a surge in volume, which I'd expect after these results, this high should be tested. If it happens to break through that resistance, the stock could potentially run much higher. The 18 month high is $0.52 cents.
Rehabilitation facilities and services will always have a need in today's society. Forterus is one of the few publicly traded companies with expertise in this area and they have benefited from stable contracts in spite of tumultuous economic conditions. The company ended 2009 with stellar financial results, which based on the current share price was clearly a surprise to Wall Street. The stock has a low float and the chart appears to be setting up for a move higher. At a current PE of 2 I believe FTER.PK has the goods to at the very least double. This could happen as early as Monday, but to be frank, I wouldn't be at all surprised if it went well above that. Forterus, Inc. (FTER.PK) is the next perfect stock.