MDT: ICD Business Flourishes

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I entered Medtronic (MDT) at around $48 on a hunch that the stock was too cheap to stay below 50 for long. Medtronic reported 2nd quarter revenue growth of 11% which sent the stock to $53 in after hours trading. Medtronic is a solid large-cap stocks that has some room to run after recently moving up from a bottom.

I like Medtronic for a couple of reasons:

  • They currently hold 53% of the ICD (implantable cardioverter defibrillator) market, which regulates patients’ heartbeats. As the global population continues to age, heart problems will be one of the top concerns among senior citizens, and hopefully Medtronic can provide first-class medical equipment to alleviate any heart ailments.
  • Medtronic has posted solid numbers over the past year; For one, their ROE stands at 25%, placing MDT among the top 5 firms in medical device industry in ROE.
  • Analysts expect Medtronic to achieve a 15% growth rate over the next 5 years, especially if Medtronic can successfully turn around ICD sales and market their products to more foreign hospitals.
  • Medtronic’s Stable Growth and Revenue Gains

    I like the large size of Medtronic and plan to hold the stock for the long term mainly because I’m very conservative when it comes to the medical equipment industry. There are just too many lawsuits, SEC reviews, and patent infringement cases that small companies must steer away from. By investing in a larger giant like Medtronic, their $60 billion market cap and reputation as a medical device maker giant really hedges a lot of potential problems.

    Which medical equipment stocks do you currently hold?

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