Hospital Services For Stay At Homes

Savvy Sy Goldblatt usually keeps mum about his investments, but this is an exception: "Never in my 18 years in this business have I bought more than a 5% interest, but here I am now owning more than 19% in Staff Builders," says Goldblatt, who heads the New York investment firm S Squared Technology. What's so special about Staff Builders, the nation's third-largest home health-care provider?

"For one thing, it's a very undervalued company in a business that's rapidly widening," says Goldblatt. Now trading at 3, the stock is cheap, he adds, because its market capitalization of just $48 million is dwarfed by revenues that are expected to hit $225 million next year. Revenues totaled $198.6 million in the year ended Feb. 28, 1993, with a profit of 14 a share this fiscal year, vs. a loss in 1992. Next year, Goldblatt expects profit of 25 a share. "This stock will be a huge winner in a couple of years," he says.

Another astute pro, John Westergaard, agrees. He sees Staff Builders growing at a 15% to 20% clip annually over the next five years, largely because of the huge potential in home health care. That market, he says, is being driven by the growing numbers of senior citizens. Plus, the national cry to cut health-care costs favors Staff Builders, he adds.

In addition to basic health-care services, the company provides chemotherapy, blood transfusions, and dialysis, attending to some 9,000 patients daily. And Westergaard thinks the rapid spread of AIDS has further increased demand for these types of home care.

Based on the multiples that other home health-care stocks sell for, Westergaard says Staff Builders should trade at 4 1/2. Analysts Alan Roneses and Stuart Linde of Fahnestock figure the stock will rise to 5 this year and climb as high as 13 in four years.

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