Tuesday, November 4, 2008

Medtronic: Trying to Broaden My Horizon

This month has been unique for me in that I am investing in stocks that I have never owned.   I wished that I had bought Medtronic (MDT) in the early 1990s.  By the time I became familiar with the company, probably about 10 years ago, it was priced too high for me.  On a split adjusted basis the stock went from around 2 in  early 1990 to 60 or so by December 2000.  For the last eight years, it has spent most of its time meandering in the 45 to 55 range.  After 8 years of this meandering, it finally broke through this range on the downside hitting 36.25 in late October.  Even though the stock price has been almost cut in half since its high 2000, earnings have continued to progress nicely.  EPS was 1.05 in 2000 and it has steadily risen to 2.61 in 2007.  Its fiscal year ends in April, and the consensus estimate for earnings for the fiscal year ending in April 2009 is $3 and $3.36 for the year thereafter.MDT: Analyst Estimates for MEDTRONIC INC - Yahoo! Finance   I just took a starter position at 39.96, or just over 13 times this fiscal year's earnings and at a price to growth ratio (PEG) of  less than 1.   I try to buy quality stocks when they are on sale and this is the most favorable price that I have seen on MDT for years.  Morningstar has it rated 5 stars, with a consider to buy currently at around 50. S & P is less positive giving it a 3 star rating. 

I considered buying Fidelity's Select Medical Equipment fund (FSMEX), which would be a good choice to receive a broad exposure to this medical equipment sector, but I instead decided to pick my own way through it.  Both Zimmer (ZMH) and Stryker (SYK) have undergone serious corrections and I will like to choose one-not both- of them by tomorrow or later today.  Medtronic is heavily weighed in the Fidelity Select fund at about 14% according to its last filing.  You can review all of the holdings for funds at the SEC web site and this is a link to the last filing from Fidelity that includes all of its Select portfolios. http://www.sec.gov/Archives/edgar/data/320351/000032035108000013/main.htm  This is over 700 pages so I use the MSN Money site which will give you the top 25 holdings which is all that I am interested in anyway. FSMEX - Fund Top 25 holdings, Fund top twenty-five holdings - MSN Money

With a few more good days, I may even break into positive territory.  

I did note that GXP was falling and I do have it on my list for another add at anywhere from 17 to 18.5.  It is currently at 18.85 which juices the yield to 8.8%. see post:

 I am not a financial advisor but an individual investor trying to navigate my way through a mind field. In these posts, I am acting as an unpaid financial journalist and an occasional ornery political commentator.   I am also aggregating financial news stories that I view as important and providing any reader of these posts, assuming there are more than a couple, with links to those articles, sort of a filtered, somewhat intelligent, free search engine.  Any discussion made by me of particular securities  is not a recommendation to buy or to sell.  Trade at your own risk.  Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons.  The sale may before or after the post.  Before buying or selling any stock, even one recommended by a trusted financial advisor,  please research it and make up your own mind which is what I always try to do.  Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news.  In this post, and all others by me, I am merely describing my reasons for purchasing  or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale.  The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile.  Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments.    

No comments:

Post a Comment