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Actionable news in FONR: Fonar Corporation,

The Paradox Of Fonar Should Not Deter Investors


Fonar is a stock that is trading at a very deep discount.

While one can speculate on why this is, I think the very low trading volume is the culprit.

However, this should not deter long-term investors from the stock.

And if I am right, even at current levels, I think investors who buy Fonar stock could see 50% upside over the next 12 months with very little risk.

I have to admit, there are instances that I have no explanation for the market's behavior. Most of the times, I understand why it reacts the way it does, but there are times when it reacts beyond my comprehension.

As a side note, most of the times the market reacts differently from how I had anticipated is because I had not covered all the angles. However, there are cases where all angles were covered, and still the market behaves illogically. One of those instances is seen with Fonar (NASDAQ:FONR).

The main reason why the market has behaved illogically in the case of FONR is because all the known facts about the earnings prospects of the stock have been known for some time now. Yet, the market continued to sell the stock even as FONR continued to produce strong earnings quarter after quarter.

First of all, let's look at the highlights from FONR's latest year-end fiscal 2015 results:

  • 23% increase of fiscal 2015 diluted Net Income per common share available to common shareholders to $1.95, versus the prior year.
  • 15% increase of fiscal 2015 Net Income to $15.4 million, versus the prior year.
  • 5% increase of fiscal 2015 Income from Operations to $12.9 million, versus the prior year.
  • Increase of fiscal 2015 net revenues to $69.1 million, versus the prior...