The Next Great Bull Market: How to Pick Winning Stocks and Sectors in the New Global Economy by Matthew McCall;Tobin Smith

Author:Matthew McCall;Tobin Smith
Language: eng
Format: mobi
Tags: Investments & Securities, Investment analysis, Forecasting, Prices, Speculation, Stocks, Business & Economics, Stocks - Prices - Forecasting
ISBN: 9780470440896
Publisher: John Wiley and Sons
Published: 2009-10-14T04:00:00+00:00

Stryker

What better company to possibly buy NuVasive down the road than Stryker (NYSE: SYK)? Stryker is one of the largest players in the $28 billion worldwide orthopedic market. The baby boom generation was one that did not sit on the couch, but instead remained active, and many pushed their bodies to the limits. When people are in their 20s and 30s, the human body can take a beating, but over time it wears on the joints and bones. As the baby boomers hit the age when the bones start to creak and the joints do not move smoothly, the only alternative may be surgery and ultimately replacement.

I am betting that everyone reading this book knows someone who has had a knee or hip replaced at some point.There is a good chance it was a Stryker product used during the surgery. Stryker offers an array of products that range from knee replacements to spinal surgery to facial procedures. The diversity gives the company a chance to hold up better during an economic downturn.

When the Stryker reported fourth quarter 2008 earnings in January 2009, revenue rose 3.6 percent to $1.72 billion. In January 2009, the company expected 2009 earnings to be in the range of $3.12 to $3.22; during the April conference call, Stryker lowered its estimate to a range of $2.90 to $3.10. The company is clearly not a growth story similar to NuVasive, but it does carry an impressive array of medical devices and has a well known name in the industry. Revenue would have been up 3.3 percent year-over-year if it were not for a stronger U.S. dollar, according to the company press release in April 2009.

Technically, the stock had one of the best long term charts over the last two decades until the recent recession. Figure 8.4 highlights the parabolic move from the mid 1980s through 2008. An investment of $10,000 in Stryker in 1985 would have resulted in $2,452,600 at the end of 2007. Some say we have missed the boat, but I believe the 50 percent pullback from the 2007 high gives investors another opportunity for big gains in the future. A purchase in the $35 to $40 range is a high reward to risk opportunity for investors who are patient and have time to let the company turn around its recent earnings troubles.

Figure 8.4 Stryker

SOURCE:TeleChart2007® or StockFinder® chart, courtesy of Worden Brothers, Inc.

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