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Investing in Senior-Living Stocks

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    JMP Securities analyst Peter Martin on the senior-services market.

  • Duration 3:31
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Says baby boomers age an entire industry is cropped up to make the transition goes smoothly publicly traded names like Capital Senior Living Emeritus Corp.

And brookdale senior -- living all profiting on this niche market for senior services but with these stocks anywhere from 3220%.

Up this so far this year is there still room to run Peter -- covers these names for James.

-- on the sector how -- We are we -- -- very -- We look is the group is a great way aren't cheaper way to played -- housing recovery also.

To avoid the entitlement discussions going on as you were speaking about earlier in your show in Washington DC.

He's senior living operators offer varying levels of care in a residential environment the industry is predominately.

Private pay and surprisingly which you might not know the average age of the resident is 83 years old.

So with improving existing home sales improving home prices and and and positive trend in the stock market.

These seniors are able to sell their homes they're -- largest aspect of net worth and move into these residences to.

As a plan for their long term cap and so you're seeing tremendous momentum off the bottom in occupancy in rates.

Increases on a monthly -- That's what I send my -- up -- that made me nervous is do they depend on government reimbursements obviously stocks that you are under pressure right now because of what's going on with the fiscal clip -- -- entirely.

He -- driven by private dollars.

These are more private pay -- capital -- living you mentioned is 97%.

Private pay.

Brookdale another name we'll discuss.

Is 80% private pay.

The Medicare portion of the revenues comes from ancillary services and if the company actually offer some skilled nursing services as part of a continuum of care.

OK so Capital Senior Living -- a -- obviously really stands out because it's up a 120% you wish your party and that -- is there any room left there.

We actually see you know -- based on our price target another 50%.

Real the company is yes the company is seeing its tremendous growth and occupancy.

They're probably gonna put through some maverick I'm stronger than average rent increases in 2013.

And then the real estate value underlying the company.

Is very valuable.

And could be a takeout target for -- health care reits who are looking to expand their asset exposure in the senior housing industry because it is private pay.

And it it's not tied to as we talked about Medicare or Medicaid -- your top estimate -- -- Eric and Heidi about brookdale.

This is -- -- Capital Senior Living is definitely our top pick in the group we also like Brookdale Senior Living we have a 32 dollar price target another 30% upside.

This is a larger national player three billion dollar market cap.

And there's been discussions at the company -- actually monetizing its real estate.

Or even spinning off its own -- so there's still a lot of value to be realized hear -- real quick before we go emeritus would you that would right here.

I'm married this is actually a higher acuity operator 16% of its alzheimer's -- -- yes I actually think there's tremendous operating leverage in thirteen and fourteen.

As the fundamentals improve occupancy and rates so yes all three -- good -- here.

Thanks so much really interesting ideas there was look at boys make money right now thanks a lot.

Thank you Melissa.

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