It’s rare to find a company that benefits society and investors. Our ability to screen the entire U.S. stock market for the best and worst stocks based on criteria proven to generate alpha makes us uniquely qualified to find such rare companies.

Our Long Idea is a company that has consistently grown profits for over a decade, in good and bad times.

Even though the company’s stock has significantly outperformed the S&P 500 year-to-date, it remains undervalued and continues to provide strong upside potential.

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This stock offers favorable Risk/Reward based on the company’s:

  • position to provide care to an aging population,
  • rising admissions and occupancy rates,
  • increasing hospital and bed counts,
  • leading market share, cash flow and profitability, and
  • cheap stock price that implies profits will never grow again from current levels.

Acute Care Services Play a Key Role

General, acute care hospitals typically provide a full range of services to accommodate multiple medical specialties, such as internal medicine, general surgery, cardiology, oncology, neurosurgery, orthopedics and obstetrics, as well as diagnostic and emergency services.

Age, inevitably, brings a wide range of health problems, and older patients will increasingly rely on the comprehensive services and treatments available at acute care hospitals, which drives demand for acute care hospitals and services over the next decade.

Precedence Research forecasts the global acute hospital care market to grow from $3.6 trillion in 2025 to $6.2 trillion in 2034, or 6% compounded annually. See Figure 1.

Figure 1: Acute Hospital Care Market Forecast: 2025 Through 2034

Sources: Precedence Research

Proven Quality Fundamentals

This company operates in an industry with growth tailwinds throughout all economic cycles. Management has successfully converted such steady and rising demand into revenue and profit growth across the years.

The company has grown revenue and net operating profit after-tax (NOPAT) by 6% and 7% compounded annually since 2007, respectively. See Figure 2.

Additionally, the company’s Core Earnings grew 14% compounded annually from $598 million in 2007 to $6.5 billion in the TTM ended 3Q25.

More recently, the company improved its NOPAT margin from 11.6% in 2019 to 12.5% in the TTM, while its invested capital turns increased from 1.4 to 1.5 over the same time. Rising NOPAT margin and invested capital turns drive the company’s return on invested capital (ROIC) from 16% in 2019 to 19% in the TTM.

Figure 2: Revenue and NOPAT: 2007 – TTM ended 3Q25

Sources: New Constructs, LLC and company filings

Significant Cash Flow Generation

The company has consistently generated large cash flows for over a decade. The company hasn’t recorded a negative free cash flow (FCF) in any fiscal year in our model, which dates to 2008.

The company generated a cumulative $50.4 billion (25% of enterprise value) in FCF from 2014 through 3Q25. See Figure 3. Over the TTM alone, the company generated $10.5 billion in FCF.

Figure 3: Cumulative Free Cash Flow Since 2014

Sources: New Constructs, LLC and company filings

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