Medtronic Inc. (MDT ) is the world’s largest manufacturer of
implantable biomedical devices in the cardiac, neurological and vascular
markets. The company has grown profits and dividends 11-16% annually over the
last ten years earning a return on equity of 18-20%. Facilitating the continuation of this trend:
(1) MDT has strong R&D program and consequently has
a deep product pipeline insuring strong organic growth. It expects to launch 20
new products in the next 12 months,
(2) market
response to recently launched products,
(3) expansion
into international markets,
(4) a stock buyback
program.
Negatives:
(1) it is in a highly competitive industry,
(2) economic uncertainty can impact customer
willingness to incur the cost of new procedures,
(3) it is involved in several patent infringement
suits.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio Since 2004
Ind Ave 1.5
10* 26 NA
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
Ind Ave 25 15 NA 14 NA
*the majority of companies in MDT industry do not pay a dividend
Chart
Note:
MDT stock made good initial progress off its March 2009 low, quickly surpassing
the downtrend off its August 2008 high (straight red line) and the November
2008 trading high (green line). It then
traded sideways for the next two and a half years before resuming an
uptrend. Long term the stock is in an
uptrend (blue lines). Intermediate term
it is in an uptrend (purple lines). Short
term, it is in an uptrend (brown line). The wiggly red line is the 50 day
moving average. The Dividend Growth and Aggressive Growth Portfolios own 75%
positions in MDT. The upper boundary of
its Buy Value Range is $37; the lower boundary of its Sell Half Range is $72.
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