Reprint of Original Article from July 15th 2010…
OpenTable (OPEN) and Amedisys (AMED) – What would you do with these two stocks?
Here are their charts.
OpenTable looks like a rocket ship taking off!
Amedisys looks like a rocket about to make impact!
I have been eyeing both of them for similar reasons. Both are currently at nice wacky extremes. Interestingly enough, all I hear about both stocks are negative reviews.
As of July 14th, Amedisys is down almost 50% in the past 6 months and OpenTable is up over 70% in the same time period. Amedisys earned $5.20 a share last year giving it a P/E of 5 and OpenTable made $0.30 a share last year giving it a nice P/E of 146.
| No. | Ticker | Performance (Half Year) | Analyst Recom |
| 1 | AMED | -49.74% | 1.9 |
| 2 | OPEN | 72.75% | 2.1 |
Side note: Look at the average Analyst Recommendation on both of them, shows what they know!
My initial thought was the same as everyone, Buy Amedisys and Short OpenTable. Then I say to myself, buying Amedisys is like trying to catch a falling knife. Shorting OpenTable is like standing in front of a freight train.
Amedisys appeals to me because it is a home healthcare stock. They are the target of political finger pointing. It happens in all healthcare industries, they all get their turn. The health insurance industry was under scrutiny, as well as the pharmaceutical companies, as well as the nursing homes.
When you have an industry that receives government money as a large portion of their revenue, there will be forces in Congress and the Senate, that will look to find someone to blame for their budgetary woes. The fact that the SEC is investigating them doesn’t scare me, they always investigate after Congress or the Senate makes a stink. Class action lawsuits are the last thing I am concerned about because lawyers sue every company whose stock goes down.
So why don’t I buy Amedisys? Because the trend is your friend and right now the trend is down!
OpenTable the big problem is their valuation. How do you take a company that earned $7 million dollars and give it a market cap of $1 billion? After checking out their website and seeing what they do I said to myself this could be the next Priceline or Amazon. Amazon went from a retailer to a middleman. Many of the products you buy on Amazon are being sold by a third party. That third party pays Amazon a huge commission for using their site. Is this what OpenTable has in mind?
[ad#In Post Ad]
Mobile phone apps are a big deal nowadays. Although mobile phone usage is still very low when it comes to making purchases and reservations, it is growing more and more each year. As more people use their mobile devices for tasks like airplane, hotel and restaurant reservations, OpenTable stand to gain from that.
The reason I will not short this stock is because in three years time, where will this stock be? How much will they be making? Will they have grown into their market cap by increased earning? I see overvalued stocks all the time, but until the stock starts trending lower, there are still buyers out there.
Remember, when the trend changes there will be plenty of time to buy or short, but until that time comes, sit back, relax and enjoy the show!
I hold no positions in either companies.
Lincare Holdings also homecare, looks like a nice short. Earnings where ok but guidance was not so great. Too many unknown issues with Medicare law changes. LNCR probably has more downside to it. It is currently down 7% to $24.20.
Amedisys, Inc., is a provider of home health care and hospice services. It is highly dependent on Medicare reimbursement and a material portion of its business faces government regulation of Medicare. The company’s home health care agencies provide a variety of skilled nursing care, as well as other services, in the home of the patient. Its health staff provides and helps coordinate the care and/or therapy as ordered by a physician. Through its home health agencies, Amedisys provides a wide variety of health care services including: Registered nurses that provide specialty services such as skilled monitoring, assessments and patient education, licensed practical nurses who perform technical procedures, administer medications and change surgical and medical dressings, physical and occupational therapists who work to strengthen muscles, restore range of motion and help patients perform daily activities, speech pathologists/therapists who work to restore communication and oral skills, social workers who help families address the problems associated with acute and chronic illnesses and home health aides who perform personal care such as bathing or assistance in walking.
OpenTable, Inc. was incorporated on October 13, 1998, and is a Delaware corporation. The Company provides solutions that form an online network connecting reservation-taking restaurants and people who dine at those restaurants. The Company’s solutions include its proprietary Electronic Reservation Book, or ERB, for restaurant customers and http://www.opentable.com, a popular restaurant reservation website for diners. The OpenTable network includes approximately 12,000 OpenTable restaurant customers spanning all 50 states as well as select markets outside of the United States. The OpenTable ERB combines proprietary software and computer hardware to deliver a solution that computerizes restaurant host-stand operations and replaces traditional pen-and-paper reservation books. The Company’s ERB streamlines and enhances a number of business-critical functions and processes for restaurants, including reservation management, table management, guest recognition and email marketing. It designs, builds and operates the OpenTable website in North America and the United Kingdom as well as websites localized for Germany and Japan. In addition to the OpenTable website, it offers a version of the OpenTable website optimized for use on mobile devices as well as free mobile applications for use on Android, Blackberry, iPhone, and Palm smartphones. It designs, builds and operates the OTRestaurant website, which serves as an information and services portal for its restaurant customers. The website provides restaurant customers with secure access to client-specific materials including detailed online reservation reports, online invoicing and feedback forms from recent diners. It is subject to general business regulations and laws as well as regulations and laws specifically governing the Internet.
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