Sicko Stock Pick - CML Healthcare

TOP PICK: CML Healthcare

clc.un - trades on the TSX

My absolute favorite stock as of right now - conservative investment. Small cap Canadian healthcare income trust. CML Healthcare is a community-based provider of laboratory testing services in Ontario and a provider of medical imaging services in Canada.

Check out CML Healthcare Income Fund on Google Finance

Back in April, this what Royal Bank had to say:

RBC CM Research Highlights CML Healthcare (CLC.UN) - $15.96 - LBO/Acquisition Possible –Price Target Increased Sector Perform, Average Risk – Price Target: $17.50 RBC CM believes CML is an attractive business and potential acquisition candidate due to a highly predictable and relatively safe revenue stream, industry leading margins (~50%), and favourable long-term prospects for its core business. In February 2007, MDS sold its Diagnostic division to Borealis Infrastructure at approximately 12-13x TTM EV/EBITDA. While this transaction does provide a precedent, CML currently trades at a 12.9x multiple. However, an acquirer might be willing to pay a premium to get a turnkey business that requires no "restructuring or operational enhancements". RBC CM’s LBO model shows that a takeout at 14.5x TTM EV/EBITDA (13.4% premium) would still yield an IRR ~16%. More interestingly, pension funds and other similar tax advantaged players may find CML more attractive than most other market participants as these groups likely have the ability to arbitrage the value of the tax. RBC CM’s new target goes to $17.50 (previously $14.00) and includes a 25% probability of a tax-advantaged fund acquisition of CML.

Since April 2007, CLC.UN continues to rise, but it is still a safe bet in MY opinion.

DISCLOSURE: I own shares in CML Healthcare (CLC.UN)

Do your own research!