After a few months of heady growth, IVF provider Virtus Health's share price is back where it was when it released its interim result in February. The company continues to face volatile IVF cycle growth and is losing market share. Nonetheless, Virtus remains the market leader, has excellent returns on capital and throws off plenty of cash. The stock now sports a price-earnings ratio of 15 based on consensus estimates for 2017 earnings and a free cash flow yield of 8.2% – not to mention a fully franked dividend yield of 5.3%. Having pushed below our recommended Buy price, we're upgrading to BUY.
Note: The Intelligent Investor Growth and Equity Income portfolios own shares in Virtus Health. You can find out about investing directly in Intelligent Investor and InvestSMART portfolios by clicking here.
Disclosure: The author owns shares in Virtus Health.