This Could Be The Best Small-Cap Stock to Buy Right Now

When you look at it from a certain point of view, the whole of recorded human history is a history of “disruption.”

Some unknown, ancient Chinese innovator put the papyrus and clay tablet makers out of business with paper. Fourteenth-century European tinkerers slammed the door on the sundial industry with their newfangled “clocks.” Karl Benz put a lot of horses out of work. The Wright brothers torpedoed the luxury ocean liner sector.

I’m oversimplifying, but, clearly, if you ever get the feeling you’re “King of the hill” or “the only game in town,” it’d be a good idea to check your six – look behind you.

Disruption is the rule, but like any great rule, there are always exceptions – companies in sectors and industries that aren’t, at least on any reasonable time horizon, susceptible to disruption.

In other words, sometimes you get a king that can’t be dethroned.

These rare exceptions are in a pretty cushy position in the markets – free to run through a cycle of growth and consolidation practically ad infinitum. These are excellent long-term holds.

I’ve got an exceptional stock lined up for us today. First of all, the stock is a fantastic value in this market, with one-year price targets to kill for. The company is in a business that, by definition, cannot “go digital” or move online.

And best of all, it’s flashing a very special buy signal…

Sometimes Telemedicine Just Won’t Work

Talk about disruption – the pandemic has been the mother of all of ’em. It’s upended companies, segments, entire sectors, even, across the global economy.

It certainly disrupted the way we interface with the U.S. healthcare system. In January 2020, if you’d have said the word “telehealth” or “telemedicine,” not many people would’ve even known what that was.

But now, telemedicine – remote, video-powered visits with physicians of all kinds – are the norm. At first, patients avoided doctors’ offices for fear of catching COVID-19, but even while the pandemic ebbs and surges, millions of people have discovered you don’t actually have to go to the doctor to “go to the doctor.”

But, you guessed it: There are exceptions. You couldn’t get an appendectomy done over Zoom, for instance.

And you can’t get a physical/occupational therapy session done online, either. Not now and probably not ever.

Physical therapy is a distinctly hands-on medical discipline, enabling patients to recover and recuperate from a whole galaxy of ailments, aches, and pains. Some patients undergo physical therapy for years on end; they depend on it, swear by it.

In fact, physical therapy or “outpatient rehabilitation” is a $30 billion industry projected to grow by 5% a year until at least 2025.

There are a couple of forces driving that growth, but it largely boils down to a population that’s growing increasingly older and increasingly active – a steady stream of business.

Here’s Today’s “Un-Disrupt-able” Pick

That brings me to U.S. Physical Therapy Inc. (NYSE: USPH).

This Houston, Texas-based firm is one of the biggest clinic operators in the country – more than 570 clinics in 39 states. It operates its own clinics, but it also operates clinics in other healthcare companies’ facilities. It just closed on a 70% ownership position in an industrial injury prevention services provider. This is a smart strategic move; with its acquisition, U.S. Physical Therapy is essentially buying an extra $27 million in yearly revenue – at margins approaching 20%, to boot.

For as robust as the company’s presence is, it’s a classic small-cap stock: The market cap is just $1.1 billion. USPH shares are currently trading at nearly $88, but the consensus is this stock could be trading above $132 by this time next year, which would put a 50% profit on your books. I tend to think the stock could do much better, but 50% is a safe bet.

And like I said a minute ago, the stock is flashing some interesting, often-overlooked buy signals – reversion and relative strength.

Like a lot of stocks lately, USPH has been knocked for a loop – it’s down something like 23% in the last month. Whenever a stock falls that far, that fast, the principle of reversion holds that the price will tend to return to “normal,” which, in this case, would be around $111. What’s more, the relative strength index (RSI) reading is at 32 and falling, which puts this stock right into oversold territory. What this usually means after such a steep drop is the downtrend will reverse.

And I think it’s going to reverse quickly. The stock was up nearly 4% late yesterday, but if you move today, there’s plenty of fast upside in U.S. Physical Therapy. Think about holding this one for the long term, as well.

— Garrett Baldwin

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Source: Money Morning