A penny stock that could radically reduce the stress of pregnancy
This tiny small-cap supplier of medical diagnostic equipment has enormous potential for investors, says Tom Bulford.
Last Friday was just the sort of day that makes my life sleuthing out small companies worthwhile.
At a humdrum business park in Thatcham, I came across a product that could transform the lives of pregnant mothers, save the NHS a fortune and make a good deal of money for the business that is selling it. If it delivers on its potential, it could make investors a lot of money too.
When I say this is a small business, let me give you an idea of what I mean. The company's founder and 40% shareholder has one office. The marketing director (his wife) shares a second office with a trainee. Tracey, who keeps an eye on the money, wis in a third office with the finance director. And a young chap called Paul wis in a small warehouse dispatching the goods.
That's it. And what also stands out is the second-hand furniture and lack of excess that you might find in small tech companies, for example. And the directors, too, pay themselves very modest salaries, and are motivated by share options that will not be worth anything unless the share price trebles from here over the next three years.
A tricky dilemma during every pregnancy
If it is corporate greed you are after, you certainly won't find it at Sutherland Health Group (SHGP). This tiny business has its shares quoted on PLUS Markets, where the mid-price of the very wide 1.3p-1.8p dealing spread values the business at just £1.1m.
But back to that product. If you are or have ever been a pregnant mother, or the type of husband who pays any attention to the physical and mental traumas of your child-bearing wife, you might be aware of amniotic fluid.
An unborn baby develops in a fluid-filled bag called the amniotic sac. This amniotic fluid turns out to be rather important. It protects the baby from a blow to the mother's stomach; it helps the baby's lungs and digestive system to mature; and it protects the baby against infection.
So if this amniotic fluid starts to leak, alarm bells are raised. The expectant mum will rush to hospital, where a rather invasive inspection will determine whether or not the leaked fluid is indeed of the amniotic variety, or just good plain urine. If it is the latter the mother of course feels relieved. But she also feels a little foolish for having got in a flap about nothing and wasted the precious resources of the hospital. And if another leak happens the following day she will dither over whether to dash to the hospital again.
This tricky dilemma can now be avoided, thanks to yet another innovation in the field of medical diagnostics.
A string of important health products
It really is extraordinary what can now be detected from minute samples of bodily fluids or tissue (and we have one really exciting player in this industry in the Red Hot Penny Shares portfolio). The innovative product that is now being sold by Sutherland Health is the amniotic leak detector. This is a panty liner that changes colour when touched by liquid. Urine causes it to turn yellow, but amniotic fluid sees it turn blue.
Sutherland Health did not invent this product, but it has the rights to sell it in the UK and Ireland. As well as supplying health authorities, it is also selling it through Amazon which, in a move that will challenge the dominance of Boots and Superdrug, has now set up its own health and beauty division.
Here is the reaction of one Amazon customer: "I had major problems with my first pregnancy I wish I had had these to help me see if I was losing fluid. I'm using them in my second pregnancy now and they are making it much less stressful Brilliant buy and thank you Sutherland Health Group for coming up with the idea."
Sutherland Health designs and sources products for the National Health Service, and a growing number of other health professionals and specialist distributors.
Aside from the amniotic panty liner it offers a vaginal infection swab, another simple diagnostic device that can detect bacterial vaginosis without the need for an inspection; the Condomania condom range (free on the NHS); Thixo-D, a corn starch based thickener for patients who have difficulty swallowing food.
The business is now recovering from the loss, to a Chinese supplier, of a contract to supply the NHS with hygiene products but otherwise has a steady record of growth. Sutherland may be a real stock market minnow, but if you can tolerate that dealing spread and want to get alongside a real owner-managed business this one could be for you. I'll certainly be keeping track of it.
This article is taken from Tom Bulford's free twice-weekly small-cap investment email The Penny Sleuth. Sign up to The Penny Sleuth here.
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