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Aggressive Growth

STAAR Surgical Co (STAA - Snapshot Report) nearly doubled last month while other stocks were getting crushed. Valuations are high, but if the outlook for this Zacks #1 Rank (Strong Buy) keeps getting better the gains could keep coming.

Company Description

STAAR Surgical makes minimally invasive ophthalmic implantable lenses as an alternative to LASIK. The company also has lenses to replace the eye's natural lens after cataract surgery.

Seeing Green

On Aug 2 the company reported a 19% increase in revenue, to $16.3 million. STAAR also saw its margins improve to a 13-year high, which led to the better than expected earnings results.

Earnings per share came in at $0.02, edging out the Zacks Consensus Estimate by a penny. Net income was just around $862 thousand, up from a $1.6 million loss a year ago.

Additionally, the company showed a stronger balance sheet, increasing its cash balance to over $13 million.

Analysts Getting Bullish

Estimates inched a couple cents higher and are now averaging $0.08 per share for the year. Compare that to a 9-cent loss in 2010.

While next year's estimates are unchanged, averaging $0.14, that is still good enough for an 81% growth rate.

Growth, but Not Value

When seeing the EPS counted in pennies rather than dollars it is tough to find good P/E ratios. Also, the company's P/S is well over 4 times.

But, there is a clear growth story here and as long as estimates keep rising the stock should as well. STAAR is looking to cash in on 4 new products that received regulatory approval so far this year that should bolster the improving cash flows. The company also went on to raise its revenue outlook for the rest of the year.

Defensive?

Healthcare is often one of the go-to industries for those looking to get defensive holdings. STAA may not fall into that category but it does have a niche market and a great outlook.

The Chart

Those valuations I mentioned earlier here largely due to the stock going gangbusters in August, so many would opt to wait for a pull back. But, with 73% or so owned by institutions and insiders there may not be many sellers out there.

STAAR Surgical Co - ticker STAA>
 
 
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Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service

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