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Allied Healthcare Products, Inc.

RATING ** STRONG BUY**

BOOK VALUE – $4.56

1yr PRICE TARGET – $9.03

Allied Healthcare Products, Inc. (NASDAQ:AHPI)

Is Ripe for A Takeover

Here at Small Cap Post we bring investment opportunities to people just like you—savvy, everyday investors—that give you the opportunity to earn exactly what you deserve to earn on the companies you invest in. Our latest research brings us to Allied Healthcare Products.

Companies like ALLIED HEALTHCARE PRODUCTS, INC. (NASDAQ: AHPI) Inc. are on the cutting edge of asset discovery and market growth, giving them the true potential to reach market capitalization sizes like the ones our sector winners have enjoyed.

Healthcare is the big banana; too big to overlook.

The US market alone is worth $150 billion, that’s 12% of US GDP. It grows faster than virtually anything else.

We’re going to dive in together into the field of Medical Devices, which encompass a huge range of products that are generally sold to hospitals, acute care and treatment facilities, where we’ll look at a climbing sub segment called Respiratory Care, soon to be upwards of $20 billion.

Healthcare is a highly profitable business, that doesn’t depend on economic prosperity and typically is protected from competition by long life patents. Healthcare companies carry huge valuations, a big multiple of growth, assets or any other metric.

Let’s Get Started Making Money

Now let’s talk specifically about Allied Healthcare Products, Inc. because we’ve done some digging and it’s time to share the results with you. When all factors are combined, this spells opportunity for savvy investors seeking to discover a winning addition to their investment portfolio.

Click here to read AHPI complete Analyst Report

Let us take a closer look at this $20 billion sub segment called Respiratory Care. It tends to get over looked a lot because it lacks some of the glamour and glitz that high tech bestows. But that doesn’t change the fact that respiratory care is an everyday part of medicine. It will always be needed and, unless people stop breathing, it can never become obsolete. If anything, its applications are growing nicely every year.

But there is so much more that makes respiratory care interesting. It is a sleeper that is growing about 3% but could easily double that pace because of factors such as an aging population, the effects of global pollution and a society that insists on being more mobile. And because the business lacks the hot sexy image, it also lacks the outrageous valuations. Let’s take a look.

The Global Market For Respiratory Care

According to Global Industry Analysts, Inc, the worldwide market for Respiratory Care Equipment and Supplies is forecast to grow about 3% annually reaching $21+ billion by the year 2020. Growth is being driven by the rising occurrence of major respiratory disorders such as COPE and OSA, growing patient awareness, and access to healthcare infrastructure. Advances in design and technology are no less important.

In other words, the market is receptive to companies that can build a better mousetrap. Makers are continuously offered the opportunity of creating product breakthroughs such as lighter weight, improved ease of use, new applications for example are able to expand their business.

Here at Small Cap Post we continuously screen companies with emerging potential looking for winning investment opportunities. Only dirt is cheaper than AHPI and if just a few cards fall the right way, there is an opportunity to double or triple your money.

The United States

The US represents the largest market helped by the aging of the baby boomer population where each day 10,000 people turn 65 years old. The impact of The Affordable Care Act is providing access to respiratory care to more of the population.

Europe
Europe appears to be the slowest growing region due to a generally stable indigenous population. This may change over time given the flood of immigrants recently streaming into the area. A long history of government healthcare provided to the masses indicates an existing high level of market penetration.

The Asian Challenges
The Asia-Pacific region is the fastest growing driven by the massive population base and the many environmental health issues created by rapid industrialization that has depended on coal and other pollutants. China will evolve into a market for respiratory care products that dwarfs the United States.

This is a gold mine for ALLIED HEALTHCARE PRODUCTS INC. (NASDAQ: AHPI). The evolution of the market is likely to favor companies like AHPI who offer everything from construction level plumbing to hardware applications.

The importance of emerging infectious diseases such as severe acute respiratory syndrome and avian flu infection are big concerns as well as big opportunities.
ALLIED HEALTHCARE PRODUCTS INC. (NASDAQ: AHPI) in the Asian market could be a real game changer.

The Market for Emergency Respiratory And Related Products*
The global market for another sector for respiratory products is emergency respiratory and related emergency medical services (EMS) equipment which reached $5.9 billion in 2013. At a 2.9% compound annual growth rate (CAGR) from 2013 to 2018, this market is expected to rise to $6.8 billion in 2018.

Click here to read AHPI complete Analyst Report

respiratory-care

The Winners: Too Late To Invest In, But Great To Study!

Sexy Technology Sells
There are at least six giants that occupy the top end of the business. There are loads of new medical technology to disrupt the status quo. It is an attention getter and something investors perennially overpay for.

ge-healthcare_0
General Electric (NYSE: GE)
Approximate Market Cap: $265 billion
www.ge.com
Healthcare represents a paltry 12% of parent company revenues and profits. Within the healthcare mix, GE competes in 30 separate categories overlapping ALLIED HEALTHCARE PRODUCTS, INC. (NASDAQ: AHPI) in only two. Medical Devices have been one of Chairman Jeffery Imelt favorite pet projects for many years and the company is dedicated to excellence.

Valuing GE for it healthcare business is dicey at best, but if you want to own the name, the price is 27 times EPS.

Latest Headline: Will Restructuring Drive General Electric Company (GE) Stock?

bd-carefusion
Becton, Dickinson and Co.
Becton, Dickinson (NYSE: BDX)
Approximate Market Cap: $38 billion
www.bd.com
The Company founded in 1906 operates through two business segments: BD Medical and BD Life Sciences. With $10 billion sales BDX has its paws in about as broad a field of medical devices as any. If this were not enough, the company has increased its business by one-third over the past three years. So what do you have to pay to own BDX? Right now you have to pay about 34 times earnings.

A company like BDX is not so much a threat to Allied Healthcare as a potential suitor. In fact, acquisitions have been BDX’s style for years. Also, those 3000+ hospital customers that are loyal AHPI fans and would further aid BDX.
Latest Headline: Analysts Set Becton Dickinson and Co. (NYSE:BDX) Price Target at $167.81

images-4
Philips Healthcare
Philips (BIT: PHIA)
Approximate Market Cap: $14 billion
www.usa.philips.com
Formed by the September 2014 spin off from Philips Lighting, PHIA is all about healthcare. Their approximate $26 billion revenue base features Ultrasound, software, minimally invasive surgery and patient imaging. It’s emergency care products sell into the same vertical as Allied consist of things like defibrillators and data management systems.

Allied with their strengths in respiratory equipment is a nice compliment to Philips product line. On the other hand, Allied Healthcare Products, Inc. hospital customer relationships would have real value to Philips.

Latest Headline: Philips to Offer Integrated Image Guided Therapy Solutions in Canada


Stryker Corporation
Stryker Corporation (NYSE: SYK)
Approximate Market Cap: $44 billion
www.stryker.com
Stryker is best known for its orthopedic implants used in hip and knee joint replacements surgeries. But look out for Stryker EMS. They are near the top of the pack after their February 2016 acquisition of Phisio-Control. These guys make things like defibrillators and heart monitors for use by paramedics and the military.
Revenues and profits have been steady the last few years perhaps explaining the move to acquire Phisio-Control. Either way, you still have to pay up to 27 times EPS to own this industry leader.
Allied brings the very same qualities to Stryker as they offer to Philips.
Latest Headline: Greenleaf Trust Cuts Position in Stryker Corp

carefusion-logo
CareFusion Corp. (NYSE: CFN)
Approximate Market Cap: $12 billion
www.carefusion.com
CFN is a diversified $3.8 billion health tech company. It participates in respiratory and anesthesiology with two products. AirLife disposable ventilator circuits and oxygen masks used for providing respiratory therapy; Vital Signs single-use consumables for respiratory care and anesthesiology. Recently, CareFusion acquired the Clinical Consumables business of GE.

The company isn’t especially cheap either selling at 25 times EPS

This is a company where there is the least logical fit for Allied Healthcare Products, Inc. but four potential suitors out of five giants is still a great batting average. And then there are those 6500 small companies that make up the rest of the industry. We have a complete list in our data bank.

And speaking of discovery, are you ready to hear about one of the biggest secrets to ALLIED HEALTHCARE PRODUCTS, INC. (NASDAQ: AHPI) success?

Allied Heathcare Products, Inc. is connected to over 3000 hospitals in the United States.

They start by supplying all the plumbing and equipment for hospitals to install “in wall” systems that supply critical things like oxygen, carbon dioxide and other gases used everywhere in a healthcare facility from the Operating Room to the patients room.

After that, Allied Heathcare Products (NASDAQ: AHPI) sells the valves, regulators and other hardware needed to make everything work smoothly.

They have spent almost 70 years developing respect for brand names like: Chemetron, Schuco, Lif-O-Gen, Timeter, Carbolime, Litholyme and Oxequip. If you are a hospital administrator, these brands are as familiar as Tide detergent and Crest toothpaste.

As you can see, Allied Heathcare Products (NASDAQ: AHPI) is not a one trick pony. The have developed a full respiratory product offering for hospitals, acute care facilities and nursing homes. They provide mobility by having systems for home use and a division dedicated to emergency and mass catastrophe conditions.

Click here to read complete AHPI Analyst Report

Ideal times for Allied Heathcare Products (NASDAQ: AHPI) is when construction of new hospitals or remodeling takes place. The same goes for construction of acute care, senior living and other related facilities. Lately, this has a stable business.

There have been plenty of new product refinements introduced over the past year or so. The latest is the Lif-O-Gen A300 an emergency portable oxygen kit. However, there is far more new product leverage to the company’s well-respected brands than is being utilized. This is where management comes into the issue.

The medical devices business is highly competitive with over 6500 players so it is unfair to be hypercritical. What we know is Allied Heathcare Products (NASDAQ: AHPI) has been run by the same two executives for more than 20 years, both of whom are now well into their 70’s.

One of exemplary actions by AHPI is they have kept the company debt free. In fact the company is so liquid it’s assets are over three times it debts. Companies with these qualities don’t come along everyday.

Click here to read complete AHPI Analyst Report

There Will Be A Changing of The Guard
However, these virtues are part of their very few shortcomings. Chairman John Weil is 75 years old and owns roundly 40% of the stock. The key here is Mr. Weil is an investor not an operator. Estate planning issues occupy the minds of people that are at this stage of life.

The very same analysis can be made of company President and CEO Earl Refsland
who is 73 and owns about 5% of Allied Heathcare Products (NASDAQ: AHPI) stock.

Companies that have entrenched managements usually have big anti takeover provisions, but not Allied Heathcare Products (NASDAQ: AHPI). In the event of a change of control the two executives are entitled to just a single years salary.

A Force For Change?

Wells Fargo & Co., Dimensional Fund Advisors, Oppenheimer & Close Inc, Goldman Sachs Group. and Vanguard Group to just name a few are all Institutional and Mutual Fund owners of (NASDAQ: AHPI).

We consider these to be instigators of change at Allied Heathcare Products. Where else can you find a NASDAQ listed Company, virtually debt free, trading at tiny multiples, poised for a BIG MOVE with Institutional Investors and Mutual Funds – these two categories of investors own 29.6% of the Shares issued and outstanding. This amounts to a whopping 53.23% of the entire float which at 6.1m shares is tiny… Its time to buy (NASDAQ: AHPI) stock like the smart money Institutions and Mutual Funds! (see chart below for Top Institutional and Mutual Fund ownership)

Institutional and Mutual Fund Holders of (NASDAQ : AHPI)

 

Top Institutional Holders

(data Yahoo Finance)

Shares Date Reported % Outstanding

 

Wells Fargo & Company 480,638 Sep 29, 2016 5.99%
Dimensional Fund Advisors LP 292,860 Sep 29, 2016 5.47%
Oppenheimer & Close, Inc. 343,644 Sep 29, 2016 4.28%
Renaissance Technologies, LLC 76,800 Sep 29, 2016 0.96%
Goldman Sachs Group, Inc. 43,779 Sep 29, 2016 0.55%
Vanguard Group, Inc. 12,521 Sep 29, 2016 0.16%
CALPERS (California-Public Employees Retirement System) 25,400 Sep 29, 2016 0.32%
Bank of New York Mellon Corporation 11,892 Sep 29, 2016 0.15%
Cortland Associates, Inc. 10,000 Sep 29, 2016 0.12%
Manufacturers Life Insurance Co. 2,364 Sep 29, 2016 0.03%
Top Mutual Fund Holders
Wells Fargo Small Cap Value Fd 480,000 Jun 29, 2016 5.98%
DFA U.S. Small Cap Value Series 128,505 Jun 29, 2016 1.6%
DFA Tax Managed U.S. Targeted Value Port 26,236 Jun 29, 2016 0.33%
Vanguard Total Stock Market Index Fund 24,764 Jun 29, 2016 0.31%
DFA U.S. Micro Cap Series 22,068 Jun 29, 2016 0.27%
DFA U.S. Small Cap Series 13,770 Jun 29, 2016 0.17%
Vanguard Extended Market Index Fund 11,721 Jun 29, 2016 0.15%
DFA U.S. Core Equity 2 Portfolio 6,964 Jun 29, 2016 0.09%
Claymore ETF Tr-Wilshire Micro Cap ETF 5,962 Jun 29, 2016 0.07%
Fidelity Extended Market Index Fund 4,954 Jul 30, 2016 0.06%

Now here is the value to consider. The stock is thinly traded. There are just over 8 million shares outstanding and 6.1m in the float. Between insiders and 13D holders, there are about three million shares left in the float. A little buying can make for a big price change.

The stock was last traded at around the $2.00 level. The book value is way up at $4.56 per share, about double the last sale price, and a 12 month Yahoo Finance Target of  $9.03, a 400% increase from recent prices. It would be impossible to envision the company worth less than book value, and easy to see it top the 12 month target.

Once again we remind, the times where you have the opportunity to possibly double, triple or even quadruple your money are rare and we believe that you should carefully consider ALLIED HEALTHCARE PRODUCTS INC. (NASDAQ: AHPI). 

Who might be interested in a market leader like Allied Heathcare Products? Remember there are 6500 other companies in the medical device business, both large and small. Since the company is debt free, an acquiring company could use Allied Healthcare Product’s very own assets as collateral. It is pretty much a no brainer to finance.

Click here to read complete AHPI Analyst Report

We are in no way suggesting we have inside knowledge. That is neither
legal nor our modus operandi. What we have is an opportunity that does not come along every day and may not last a lot longer.

ALLIED HEALTHCARE PRODUCTS INC. (NASDAQ: AHPI) went public over 20 year ago and it is now trading on the NASDAQ stock Exchange in the U.S., which makes it one of a handful of publicly listed companies in the booming health care industry. This is something every shareholder dreams of getting in on the before the explosion of a truly revolutionary company that is
poised for growth.

Conclusion
It is clear to us here at Small Cap Post that ALLIED HEALTHCARE PRODUCTS INC. (NASDAQ: AHPI) has the right mixture of expertise, capital, and business model to establish its own market leadership and be the next breakthrough.

Companies like AHPI Inc. are on the cutting edge of asset discovery and market growth, giving them the true potential to reach market capitalization sizes like the ones our sector winners have enjoyed.

Click here to read complete AHPI Analyst Report

Now here is the value to consider. The stock is thinly traded. There are just over 4 million shares outstanding and 3.05 m in the float. Between insiders and 13D holders, there are about 1.5 million shares left in the float. A little buying can make for a big price change.

The stock was last traded at around the $2.00 level. The book value is way up at $4.56 per share, about double the last sale price, and a 12 month Yahoo Finance Target of  $9.03, a 400% increase from recent prices. It would be impossible to envision the company worth less than book value, and easy to see it top the 12 month target.

Once again we remind, the times where you have the opportunity to possibly double, triple or even quadruple your money are rare and we believe that you should carefully consider ALLIED HEALTHCARE PRODUCTS INC. (NASDAQ: AHPI). 

Who might be interested in a market leader like Allied Heathcare Products? Remember there are 6500 other companies in the medical device business, both large and small. Since the company is debt free, an acquiring company could use Allied Healthcare Product’s very own assets as collateral. It is pretty much a no brainer to finance.

Click here to read complete AHPI Analyst Report

We are in no way suggesting we have inside knowledge. That is neither
legal nor our modus operandi. What we have is an opportunity that does not come along every day and may not last a lot longer.

ALLIED HEALTHCARE PRODUCTS INC. (NASDAQ: AHPI) went public over 20 year ago and it is now trading on the NASDAQ stock Exchange in the U.S., which makes it one of a handful of publicly listed companies in the booming health care industry. This is something every shareholder dreams of getting in on the before the explosion of a truly revolutionary company that is
poised for growth.

Conclusion
It is clear to us here at Small Cap Post that ALLIED HEALTHCARE PRODUCTS INC. (NASDAQ: AHPI) has the right mixture of expertise, capital, and business model to establish its own market leadership and be the next breakthrough.

Companies like AHPI Inc. are on the cutting edge of asset discovery and market growth, giving them the true potential to reach market capitalization sizes like the ones our sector winners have enjoyed.

Click here to read complete AHPI Analyst Report

Allied Health Care Products