5-Star Stocks Poised to Pop: Five Star Quality Care

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, senior living community operator Five Star Quality Care (NYSE: FVE  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Five Star Quality Care's business and see what CAPS investors are saying about the stock right now.

Five Star Quality Care facts

Headquarters (founded) Newton, Mass. (2000)
Market Cap $148.0 million
Industry Healthcare facilities
Trailing-12-Month Revenue $1.3 billion
Management CEO Bruce Mackey, Jr. (since 2008)
CFO Paul Hoagland (since 2010)
Return on Equity (average, past 3 years) 20%
Cash / Debt $30.0 million / $114.8 million
Competitors Brookdale Senior Living
Sun Healthcare Group
Sunrise Senior Living

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 96% of the 220 members who have rated Five Star Quality Care believe the stock will outperform the S&P 500 going forward.

A couple of months ago, one of those Fools, LynchJunior1, touched on the strong demographic tailwind working in Five Star Quality Care's favor: "The oldest old (people 85 and over) are the fastest growing portion of the population, with advances in technology people are going to be living longer and longer. This company is positioned to benefit from the on going boom in the [long-term care] industry."

If you want market-thumping returns, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future. Of course, despite its five-star rating, Five Star Quality Care may not be your top choice.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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  • Report this Comment On July 16, 2012, at 3:09 AM, scout627 wrote:



    From June 4, 2012 to July 7, 2012, barely over a month, the stock price of Questcor Pharmaceuticals (ticker QCOR) steadily increased 30% in an otherwise flat market. Then a single short-seller in its blog published what legitimate Wall Street publications shortly dismissed as “old and misleading claims.” But of course, because of the calculated timing of the short-seller’s attack, it’s bogus claims got publicized before legitimate, objective firms could prepare and publicize their rejections of the short-seller’s old, rehashed and previously debunked claims. So the stock dropped sharply the next day, as investor panic set in.

    The stock gradually but steadily declined for three days, presumably as many investors decided to take profits on the stock’s sharp run-up in the month before. Over the week, the stock gave up most, but not all, of the gains it had made during the previous month.

    This creates a great buying opportunity. The stock has great growth, and value, and no debt, and is very highly rated by analysts, who predict continued strong growth for many years to come.

    Both Motley Fool and Jeffries said Citron's short-seller attack was based on nothing but "old and misleading claims." The single short-seller picked QCOR for its attack because QCOR's price had gone up 30% in the preceding month. Check out the facts from some objective source, like Yahoo Finance or Fidelity Investments, instead of falling for old, re-hashed, already debunked bunk from a single highly biased, self-interest short seller.

    For your convenience:


    FPE: less than 11.4; PEG: 0.5; Profit Margin: 38.5%; ROE: 60%;

    Quarterly Revenue Growth (YOY): 160.5%; Quarterly Earnings Growth (YOY): 243.5%

    Analyst Opinions: 7 Strong Buys, 2 Buys

    Market Cap: $2.75 Billion; Total Debt: 0

    QCOR two year stock price increase: steady climb of 300%; QCOR five-year price increase: 2000%

    QCOR ten-year stock price increase, July 8, 2002 to July 7, 2012: 4833.33%

    Revenue per Share (TTM): $4.42 (more than 10% current market price of $43.13

    Major institutional holders include: FMR, LLC: $357 Million; Blackrock, $185 Million;I

    Vanguard Group, $131 Million; Oppenheimer, $75 Million; State Street, $62 Million

    Major Mutual Fund Holders Include:

    Fidelity Investments [total in three funds, including Fidelity’s Blue Chip Growth Fund}: $400,000 million; Vanguard [total three funds]: $80 million;Oppenheimer, $50 Million; IShares S&P Small Cap 600 Index Fund: $44 million;Baron Small Cap Fund: $34 Million

    Total holdings of just these five institutional holders and five mutual fund companies: over $1.3 billion


    Analyst Opinions: 9.7, VERY BULLISH;

    Revenue Growth (TTM): 120.5%; EPS Growth (TTM v. Prior TTM): 174.6%;

    EPS Growth Projected Next Year Vs. This Year: 42%;

    Projected Long Term EPS Growth (next three to five years): 34.33%/year

    Closing Stock Price on June 5, 2012: $41.00; Closing Stock Price on July 8, 2012: $58.91

    Percentage Increase in Stock Price from June 5, 2012 to July 8, 2012: 30%

    Single short-seller attack: Sunday, July 10, 2012 [(QCOR “mentioned cautiously in [short-seller] blog”

    Closing Stock Price on July 15, 2012: $43.13

    Percentage Drop in QCOR Share Price This Week Based on the Short-seller induced panic: 25.6%

    (erasing MOST BUT NOT ALL of the stock’s price increase over the previous month)

    Wall Street Firms and Publications ATTACKING the Sunday Hit Piece in the Short-Seller’s Blog include:

    Oppenheimer; Merrill Lynch; Zacks; Jeffries (“blog post contains old, misleading claims”); Seeking Alpha (“Questcor Acthar is One Hot Drug,” “Buy Questcor’s Growth Cheaply” and “Questcor: Why Analysts Are Improving Its Ratings”); Motley Fool (“Bad Economic News Won’t Stop These Stocks (short-seller attack on QCOR’s Acthar drug “old and misleading” and “Acthar sales soared in June”) ;

    Seeking Alpha Report, June 15, 2012:

    ”Questcor (QCOR +3.5%) moves higher on positive comments out of its conference call this morning to discuss the commercialization of its rheumatology drug, Acthar. Oppenheimer says its highly encouraged by the not only the drugs prospects, but also the company's ability to execute its strategy, while both Caris and Jefferies say Street estimates don't factor in the drug effectively, and will have to move higher.” (emphasis supplied).


    Despite all these tremendously favorable facts about QCOR, a single short-seller blog that “cautiously mentions” “claims about QCOR’s top drug, Acthar--claims that are “old and misleading” according to respected OBJECTIVE Wall Street publications-- results in a 25% drop in QCOR’s price in one week. If there is a better example of insane panic-selling, or patently obviously market manipulation by a short seller, we haven’t seen it.

    Short-sellers, of course, are inherently biased, as they buys puts and “bet” large amounts of money of a company’s stock price going down. But in recent years, short-sellers have not played honestly. Instead, they publicize attack pieces, usually phony, to frighten investors and get them to sell.

    Some short-sellers even buy large amounts of the stock just before they publish their attack piece, and then sell all of those share on market open the next day, which can start the price falling and precipitate investor panic and a snowball effect.

    Even so, most QCOR shareholders have only been temporarily hurt on paper. They’ve actually made a 5% gain on their investment since June 4.

    And when there is absurdly large, panicked selling like this, with no basis but a biased short-seller’s clever market manipulation, the stock’s price inevitably recovers, and more. As the Motley Fool said in its article:

    “The allegations leveled against the pharma's drug, Acthar, were old and misleading . . . . [and] with Acthar's June sales soaring, [we] expect we'll see a lot of the lost ground recovered.:

    Often the stock’s price recovers over a few weeks, or a month or two. In this case, we expect a more than full recovery by July 25, the day after QCOR reports its second quarter earnings generated from the “soaring” sales of Achtar and QCOR's insomnia drug Doral.

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Five Star Quality… CAPS Rating: ***