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Electromed (ELMD) Has Risen 89% in Last One Year, Outperforms Market

If you are looking for the best ideas for your portfolio you may want to consider some of Summers Value Partners top stock picks. Summers Value Partners, an investment management firm, is bullish on Electromed Inc. (NYSE:ELMD) stock. In its Q2 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Electromed Inc. (NYSE:ELMD) stock. Electromed Inc. (NYSE:ELMD) manufactures, markets and sells products that provide airway clearance therapy for patients compromised pulmonary function.

In July 2019, Summers Value Partners had released its Q2 2019 investor letter. Electromed Inc. (NYSE:ELMD) stock has posted a return of 88.5% in the trailing one year period, outperforming fund’s benchmark the S&P 500 Index which returned 13.1% in the same period. This suggests that the investment firm was right in its decision. On a year-to-date basis, Electromed Inc. (NYSE:ELMD) stock has risen by 33.0%.

Summers Value Partners fund posted a return of 1.2% in the second quarter of 2019, underperforming fund’s benchmark the S&P 500 Index which returned 4.30% in the same period. Let’s take a look at comments made by Summers Value Partners about Electromed Inc. (NYSE:ELMD) stock in the Q2 2019 investor letter.

“We added to our Electromed position in the second quarter and currently own 2.3% of the company’s shares outstanding. Electromed recently announced a salesforce restructuring including the naming of a new head of sales. We applaud these changes, which should lead to higher salesforce productivity, and therefore, more attractive margins in the future. Our thesis on Electromed is that the company is currently under-earning, and as profitability improves, the stock should respond positively. We believe the company can generate at least a mid-teens EBIT margin over the next 12-18 months up from the 8.5% margin expected in fiscal 2019 (ended in June). The balance sheet remains well capitalized, and we are modeling the company to end its fiscal 2020 with over 20% of the market cap in cash with zero debt. Trading at 1x EV/Sales and 1.3x EV/Gross Profit on our full year fiscal 2020 estimates, it is our belief that the stock has 100%+ upside if management can fix the company’s salesforce productivity issues. Lastly, we view the company as a perennial acquisition target given that its two primary competitors have already been acquired by larger medical device companies.”

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In Q1 2020, the number of bullish hedge fund positions on Electromed Inc. (NYSE:ELMD) stock increased by about 300% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Electromed’s growth potential. Our calculations showed that Electromed Inc. (NYSE:ELMD) isn’t ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. You can subscribe to our free enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.