Molars, Bicuspids, Incisors Oh My!

You know the old saying. You never really appreciate what you have until it’s gone. Many Americans concerned with losing their jobs are appreciating their dentists, or at least their dental insurance. They want to make sure they and their dependents make good on subsidized dental care before it is gone and dentists offices are very busy. A recent Time article also offers some far flung anecdotal evidence that recession induced stress has led to increased teeth grinding and thus, more office visits. http://www.time.com/time/business/article/0,8599,1879760,00.html

But hold on. According to a Chicago Dental Society survey, 60 percent of dentists report a drop in elective procedures and 40 percent have noticed fewer preventative visits. http://news.medill.northwestern.edu/chicago/news.aspx?id=118493

According to a December survey by the American Dental Association, 53 percent of dentists reported an increase in the amount of time they don’t have appointments.

So we are confronted with two differing outlooks, each backed by a reasonable argument. Not much clarity here. So how does that make the dental market different from any other in 2009?

According to Sageworks (http://www.sageworksinc.com/default.aspx), a firm that tracks private-company financial performance, dentists’ offices had higher profit margins than any other industry in 2008. With average profit margins at 17%, dentistry outpaced accounting, tax preparation, bookkeeping and payroll services, legal services and mining support services among the top five performing professions in ’08.

So the market is comparatively strong. Consider taking a look at these companies if you think it can be strong enough to find some smallcap opportunities.

Irvine, CA-based Biolase (Nasdaq: BLTI, http://www.biolase.com) markets lasers to replace drills for routine and complex dental procedures. As a new generation of dentists embraces the latest technology, this stock could be interesting to watch. At .38, the Company trades near its 52-week low and far off its high of $4.64.

TENEO dental workstation by Sirona

TENEO dental workstation by Sirona

Long Island City-based Sirona (Nasdaq: SIRO, http://www.sirona.com) is a 125-year-old manufacturer of dental equipment. The Company’s 2009 guidance expects revenues and operating income excluding amortization to be flat as compared to fiscal 2008. At $10.89, the price reflects the outlook, as it is far off its $30 high.

Young Innovations (Nasdaq: YDNT, http://www.yiinc.com) of Earth City. MO sells the gamut of products that you might see in a typical office visit. It achieved solid growth in its “staples” products, but this was offset by weak results in its diagnostics. It did manage to keep its dividend and trades, at $15.40, in the middle of its 52-week high low.

Meanwhile the Santa Clara, CA-based Align Technology (Nasdaq: ALGN, http://www.aligntech.com) announced the international availability of Invisalign Teen(TM) for non-adult, comprehensive orthodontic treatment. It was introduced in mid-2008. ALGN closed today at $6.28, down from its 52-week high of $13.74 on very healthy volume of more than 500,000 shares a day.

Wakefield, MA-based American Dental Partners (Nasdaq: ADPI, http://www.amdpi.com) provides facilities, business services and support staff to 27 dental group practices which have 242 dental facilities with approximately 2,097 operatories located in 18 states. At $6.60, it trades near its low and off its high of $14.17.

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