This Small-Cap Healthcare Name Is Outperforming Its Index

Key Points

• Small-cap health staffing firm Cross Country Healthcare is notching price gains that outpace the broader market
• The stock has a low number of shares in float, which means it can have wide intraday price swings. In recent months, that volatility has resulted in upside trade
• The company has topped both sales and earnings expectations in every quarter since July 2019

Investors love to learn about companies like Cross Country Healthcare NASDAQ: CCRN with a long history of profitability, and revenue growth, and one that’s bucking the market’s downtrend. 

The Boca Raton, Florida company provides staffing and outsourcing services for health professionals, including travel nurses and temporary physicians.

If you’ve spent any time in hospital settings in the past decade or so, you’ve likely encountered some of these “freelance” professionals. I live in New Mexico, which has a relatively small population compared to other states. My family members and I have been treated by travel physicians and nurses. The level of care is exactly the same as if we’d been treated by a staff doctor or nurse. These professionals provide a service for short-staffed hospitals in various regions of the country. 

Cross Country Healthcare trended along with the broad market in Wednesday’s wide heavy-volume rally. The stock, with a market capitalization of $1.1 billion, is tracked by the S&P 600 Small Cap index, as well as the Russell 2000. 

Although large-cap indexes had a big day Wednesday, small caps actually outperformed. The SPDR S&P 500 ETF NYSEARCA: SPY was up 1.96%, while the SPDR Portfolio S&P 600 Small Cap ETF NYSEARCA: SPSM notched a gain of 2.68%. 

Outpacing Small-Cap Index

Cross Country Healthcare was up 4.03% for the session, its third day in a row of upside trade.

You can’t make too much of one upside day for the broader market, as bear-market rallies are common and you can even see some of the biggest gains during a bear. 

However, it’s always a good idea to track stocks like  Cross Country that are holding up better than most. The stock is flat relative to where it ended 2021, thanks to a lengthy correction that began in early January.

Shares are up 8.40% in the past month and up 36.88% in the past three months.

Cross Country tends to have wide intraday price swings, which is not uncommon with a small stock that has few shares in its float. In this case, the float totals just 36.3 million. That volatility can occur because the small number of shares available means buyers and sellers may have a difficult time finding someone at the other end of the trade. The wide swings mean there’s not always agreement on what the price should be. 

The stock has a beta of 1.14, meaning it’s slightly more volatile than the broad market. In this case, that’s translated to gains, but volatility can also result in greater share-price declines. 

That’s a possible negative about Cross Country. However, there are plenty of positive aspects to offset that drawback. For example, revenue grew between 53% and 127% in the past six quarters, while earnings grew at triple-digit rates for the past eight quarters. 

Long History Of Topping Analyst Views

MarketBeat earnings data for the stock show that Cross Country topped both earnings and revenue expectations in every quarter since July 2019. That kind of track record bodes well for future earnings and revenue beats.

Checking with analyst data compiled by MarketBeat, you’ll find that Wall Street has a “moderate buy” rating on the stock with a price target of $33.75, representing a 16.86% upside. 

Cross Country shares have been languishing somewhat below resistance near $30.50, where they got smacked down three times, once on July 21 and again on September 14 and 15. Watch for the stock to gather up the momentum to clear that hurdle, which would be a good sign of more gains to come. 

The company is set to grow through acquisition, as indicated by its September 13 announcement that it would acquire the assets of Mint Medical Physician Staffing and Lotus Medical Staffing. Lotus is an independent unit of Mint. The transaction is expected to close in the fourth quarter.