A leader in the medical device industry, this company is benefiting from the ramping up of merger and acquisition activity.
Stryker Corp. (SYK)
from Cabot Benjamin Graham Value Investor
Stryker Corp. (SYK) is the leading orthopedic products maker in the world, and is well diversified with its offerings of surgical instruments, stretchers and other medical devices and equipment. Orthopedic products include artificial hips and knees for joint replacements, and spinal and craniomaxillofacial implants.
Stryker traces its origins to a business founded in 1941 by Dr. Homer H. Stryker, a leading orthopedic surgeon and the inventor of several orthopedic products. The company has significant exposure to the artificial hip, prosthetic knee and trauma product areas.
Stryker has grown steadily during the past several decades and now produces sales of almost $10 billion. After sales and earnings growth stalled in 2012, Stryker is beginning to produce steady growth. Sales and EPS increased 6% during the latest 12-month period. Stryker introduced several new products and acquired five companies at bargain prices. Sales will likely rise 7% and EPS will advance 19% during the next 12 months ending 9/30/15 to $5.42. Additional acquisitions and new products could boost sales and earnings more than expected.
SYK sells at 19.3 times latest EPS and provides an attractive dividend yield of 1.7%. The company’s balance sheet is very strong with lots of cash to fund research and new acquisitions. I expect SYK to reach my Min Sell Price of 97.52 within 12 months.
J. Royden Ward, Cabot Benjamin Graham Value Investor, www.cabot.net, 978-745-5532, October 2014