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Stock Strategist Industry Reports

AMN Healthcare Still a Healthy Opportunity

Anemic conditions don't derail our upbeat thesis that this staffing firm remains a top pick in the employment services industry.

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When the supply of a commodity is constrained and demand is increasing, a supplier usually reaps the rewards. This is the case for AMN Healthcare(AHS), as long-term demand trends and an insufficient supply of health-care workers should form a solid foundation for the health-care staffer. We believe market participants are missing these long-term trends and are mispricing the firm's equity value.

Lower patient admission rates at medical facilities, light staffing turnover for the firm's clients, and uncertainty related to the future composition of the health-care industry have plagued AMN since the beginning of the most recent recession, and we believed these trends would turn earlier than they have. This dynamic has kept AMN's stock at a depressed level through most of the last calendar year. Nevertheless, health-care employment growth began to accelerate in the fourth quarter of 2011. As such, our expectation of growing patient admission rates though most of 2012 should be a catalyst for stock price appreciation, and we believe investors will be rewarded long term with major positive secular trends related to the staffing and health-care industries. In addition, the firm's resources of quality open positions and an inventory of capable health-care workers make it one of the go-to players for many health-care industry stakeholders.

Vishnu Lekraj does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.