If you’re seeking the perfect mix of earnings growth, booming dividends and great value, then Georgia Healthcare Group (LSE: GHG) is worthy of serious attention today. In fact, I’d consider it a top buy before third-quarter results are released tomorrow (Wednesday, 13 November).
The business is the biggest provider of healthcare-related services in the Eurasian country. It operates more than 50 hospitals and clinics, around 280 pharmacies and provides insurance for around 230,000 citizens. And in the first half of 2019 it saw revenues boom 13% year on year to 472.9m Georgian lari and earnings before interest, tax, depreciation, and amortisation leap 19% to 74.8m lari.
Expansion rolls on
Georgia Healthcare saw annual earnings boom by more than a quarter in 2018 and City brokers are expecting more impressive growth in the medium term, with rises of 23% and 47% currently estimated for this year and next respectively. Not only is it well placed to capitalise on the exceptional economic growth rates in Georgia, but the medical marvel is taking a variety of steps (from launching personal care products and opening new clinics to entering other markets like dentistry) to supercharge sales growth in the years ahead.
Indeed, the company took a leftfield approach to expansion last month when it inked a franchise agreement with The Body Shop to enter the beauty products market. Under the terms of the deal Georgia Healthcare will operate three standalone The Body Shop stores in the capital of Tbilisi and other major cities as well as to open up 100 ‘shop within a shop’ stands in its existing pharmacies.
Great value, rising dividends
I’d argue that the group isn’t just a great buy for growth investors, though. Thanks to its impressive cash generation – a quality that helped the amount of cash on its balance sheet rise 2% higher year on year as of June, to 27.2m lari – Georgia Healthcare shelled out its first ever dividend over the summer. Broker forecasts suggest that payouts should grow at an impressive rate over the next couple of years at least, too.
A maiden 2p per share dividend is estimated for 2019, a figure which yields a handy 1.2%. And this is expected to swell to 2.7p next year, resulting in a better yield of 1.6%. There are bigger yields out there, of course, though the rate at which dividends are likely to keep growing should see shareholders bank some gigantic dividend cheques over the long term.
What’s more, at current prices Georgia Healthcare looks shockingly cheap in terms of its forward earnings prospects. A forward price-to-earnings ratio of 17.3 times could be seen as good value considering the company’s improving position in a rapidly exploding healthcare market. But when you consider that this also helps create a corresponding price-to-earnings growth (PEG) multiple of 0.8 then the stock really does appear to be a steal. Any figure of 1 or below is widely considered too good to miss.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.