A Stock Recommendation - AMS - The Future of Cancer Treatment

First of all I want to clarify that, yes, I am talking about a regular, old, boring stock. It trades on the NYSE. It only trades between 9:30 AM and 4 PM ET (GMT - 4) and not on weekends or holidays. It is regulated, centralized, and represents equity ownership in a publicly traded company. 

So why am I discussing such an antiquated investment vehicle on a cutting-edge cryptocurrency site like SteemIt? Because despite not being a “world changing new technology” I think this stock in particular has a very good chance of delivering very good returns with much lower risk, and some people here may be interested in that.

Why I am Invested in a Stock

The company is called American Shared Hospital Services and the ticker symbol is AMS. I am very heavily invested in it and it is my only investment that I don’t plan to sell and transfer into crypto. I don’t typically invest, nor advise investing, in the stock market, so before I get into the details of the company, let me explain why I am invested in and recommending this stock now.

When I first started getting into stock market investing around 15 years ago I read a lot of Buffett and Graham and thought - “I could do that too”! I researched companies, read annual reports, listened to earnings conference calls, and bought stock in companies that I came to the conclusion were “undervalued”

What I learned (the hard way) is that there are many, many people, who are much more knowledgeable and experienced than me, with many more resources, doing the exact same thing, all the time, as their job. If a company was really undervalued, they would know better than I would, and buy it until it wasn’t undervalued anymore.

Where the Efficient Market Hypothesis Breaks Down

This is generally referred to as the Efficient Market Hypothesis. Some people believe in that and some don’t. I believe that, whether or not it’s actually true, I don’t have some special ability to find undervalued gems that everyone else has missed. I was basically gambling my money and thinking that I had some great edge because I read a few books and did some research.

Once that realization set in, I mostly stopped investing in the stock market; however, around that time a friend told me about AMS. When I told him that I wasn’t investing in stocks anymore due to all of the above, he explained why all of that doesn’t apply in this case. 

In short, the reason is that the company is so tiny. It’s current market cap is only about $18M, and at the time that I first got into it, about 9 years ago now, it was less than half of that. No big investors, funds, etc can invest in a company that small, so the Efficient Market Hypothesis breaks down. The volume traded is also tiny, and the share price often goes up or down a few percent or more because someone like me buys or sells a few hundred shares.

In a case like this, I realized that it is entirely possible to find a hidden gem that isn’t exactly missed, but just flat out isn’t even an option for anyone investing any serious amount of money. I believe American Shared Hospital Services (AMS) is such a gem, so I thought I would share it with you. Even though you’re probably investing in crypto, maybe you want to diversify, or maybe you have a 401k or IRA for which cryptocurrencies are not an option and you’re looking for something better to invest in than a mutual or index fund.

American Shared Hospital Services (AMS)

So what does American Shared Hospital Services do? To quote their website (ashs.com):

American Shared Hospital Services is a publicly traded healthcare company (New York Stock Exchange AMEX symbol AMS) with a 25-year track record of leasing state-of-the-art medical equipment to hospitals and medical centers in the United States.

What that means is that they purchase very expensive medical equipment, primarily for the treatment of various forms of cancer, and lease it to hospitals that can’t afford, or would rather not make the investment themselves.

The company currently has a portfolio of about 19 Gamma Knife radiation therapy machines leased to various hospitals mostly in the US which generate very nice cash flow every quarter. Until about 10 years ago the company paid out most of that as dividends to the shareholders and the share price was around $6, or about double what it is today.

The Future of Cancer Treatment

In 2008, the company decided to stop paying dividends and instead make a big investment in a new technology called Proton Beam Radiation Therapy. Proton beam machines at the time typically cost around $150M each and required a facility the size of a football field to house the cyclotron to generate the proton beams.

Proton beams are superior to other forms of radiation therapy because, due to their mass, the beam can “stop” at a certain location within the body (at the tumor) as compared to other forms of radiation therapy which pass all of the way through the body. This is a huge benefit for treating tumors near vital organs, such as the brain. 

With traditional radiation therapy the radiation damages everything in its path as it passes through the body, in addition to the tumor. A proton beam, however, can be made to stop at the tumor and not pass through other vital organs surrounding it.

AMS invested in a company called Mevion (http://www.mevion.com/) which came out of MIT and created a much smaller cyclotron which costs around $20M and can fit in a single treatment room. Since then the Mevion system has gained FDA approval and has been installed and running at a number of locations.

One location is currently financed by AMS and has been successfully treating patients for over a year now at UF Health Cancer Center in Orlando, Florida. AMS has said that they hope to announce plans to place additional Mevion systems at other hospitals in the US in the near future, at which point I expect to see a significant rise in the share price.

Why I Think AMS is a Good Investment

So now that I’ve gone through what the company does, I’ll talk a little bit about why I think it’s a significantly undervalued investment with room for big returns.

1. It still maintains and is even slowly growing its portfolio of Gamma Knife radiation therapy machines which sustained the previous $6 share price and dividends that they paid out in the past. This significantly lowers the risk of investing in AMS since they have a long established business which is still producing good returns.
   
   
2. It is involved in new, state of the art, proton beam radiation therapy equipment which is likely to provide a very large boost to revenue and earnings going forward.
   
   
3. Their equity investment in Mevion could be worth a significant percentage of AMS’s current market cap in itself if they go public at some point which they have talked about doing in the past.
   
   
4. It is currently trading below book value, which means that in theory if it were to sell off all of its assets it would make more money than its current market cap. This is something we would not see if it was larger and under the eye of professional and institutional investors.

To summarize, AMS has a tried and true business model that continues to perform quite well in addition to a new and exciting business with proton beams and in my opinion little to none of this is factored into the current share price.

Disclaimer

I will add the disclaimer that I am not a financial advisor and please don’t take this as financial advice. It is merely a suggestion of something in which you may be interested. Please make sure to do your own research and due diligence and discuss with your financial advisor before making any investments.