Ecolab Inc. (ECL), Healthcare Services Group, Inc. (HCSG): How to Profit From the Graying of America

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Healthcare Services Group, Inc. (NASDAQ:HCSG) operates in almost 7,000 hospitals and has over 3,500 facilities. This makes the company the largest housekeeping and laundry service provider to the health care industry. Such outstanding market penetration along with its 90% client retention rate will secure long term profits for investors.

The company’s cash conversion cycle, which is how fast Healthcare Services Group, Inc. (NASDAQ:HCSG) turns its cash outflows into cash inflows, is fairly low (43.2 for the trailing 12 months). That means that the company’s money is not stuck in inventory and/or accounts receivable for too long and is available for making the company grow and pay dividends. This a good sign to take into consideration, since it shows a sustainable growth.

Revenues for the company have always increased and almost doubled since 2007. With only one exception, Healthcare Services Group, Inc. (NASDAQ:HCSG) has been increasing its quarterly cash dividends since 2003, when it started paying dividends. This is another extra reason why you should consider this company.

Bottom line

Ecolab Inc. (NYSE:ECL)’s ability to deliver double-digit earnings growth is impressive and is a strong reason to buy this stock. I would but Ecolab Inc. (NYSE:ECL) and keep it.

I am very optimistic about Healthcare Services Group, Inc. (NASDAQ:HCSG). It is an exceptional company with great investment potential. I would definitely invest in this stock.

The article How to Profit From the Graying of America originally appeared on and is written by Louie Grint.

Louie Grint has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Louie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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