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Forget gold and Bitcoin! Why I think this share can help me become an ISA millionaire

Rather than risking my hard-earned on speculative instruments such as gold and Bitcoin, I think Medica (LSE: MGP) is one of several shares that can help me become an ISA millionaire. The share price looks perky today on the release of the company’s half-year results report. But it’s no giant of the FTSE 100. In fact, it’s a small-cap share with a market capitalisation of just £145m.

Why I think Medica can help me become an ISA millionaire

But the firm has grown fast and sports a multi-year record of balanced escalation in the financial figures. Indeed, revenue, earnings and cash flow have all been improving. But Covid-19 hit trading hard. However, the recovery is happening now. And I reckon Medica will resume its growth trajectory soon.

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The company operates in the healthcare sector and describes itself as the UK market leader in teleradiology services. And teleradiology is the remote electronic transmission of radiological patient images. That means Medica provides outsourced interpretation and reporting of Magnetic Resonance Imaging (MRI), Computerised Tomography (CT) and Plain Film (X-ray) images.

It offers two primary services to hospital radiology departments, its NightHawk urgent-reporting service and its Elective routine cross-sectional reporting service. Through those divisions, Medica contracts with “the largest pool of consultant radiologists in the UK.” That sees the company performing remote access teleradiology across its customer base of more than 100 NHS Trusts, private hospital groups and diagnostic imaging companies in the UK.

The shares are up about 3% today, as I write. I reckon that’s down to the company’s statement in the report saying there’s been “significant improvement in reporting activity towards the end of H1 2020 continuing into H2 2020.”

Indeed, Medica is seeing a surging recovery in operations after a collapse in earnings because of the coronavirus crisis. Looking immediately ahead, the directors reckon the company is “well-positioned to support clients, [and] manage a backlog of elective procedures.”  

Interim dividend maintained

Today’s figures cover the six months to 30 June, a period that saw hospitals postpone many normal medical activities. Total revenue declined by almost 23% year-on-year, mainly due to a more than 42% fall in revenues from the Elective division. Overall adjusted operating profit plunged by 62%. But the directors reckon Medica’s cash position remained “strong” through the period demonstrating the resilience of the business model.”  

Indeed, the firm’s confidence reflects in the decision to maintain the interim shareholder dividend. And City analysts are optimistic, predicting a 35% surge in earnings in 2021 that will exceed pre-Covid-19 levels. It seems growth is firmly on track.

Meanwhile, with the share price near 134p, the earnings multiple for 2021 is just below 16. And the well-covered dividend yields is an anticipated 1.85%. I think that’s an undemanding valuation given the robust-looking growth prospects. And a small net cash position underlines the strength of the balance sheet.

As part of a diversified portfolio, I think this share can help me become an ISA millionaire, so I’d buy it today.

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Kevin Godbold has no position in any share 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.

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