Becton Dickinson (BDX) 2012 Review

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Becton Dickinson produces a wide range of medical devices as well as products for the collection and transport of diagnostic specimens, instruments for analysis and testing for infectious diseases and research and clinical tools for the study of cells.  The company has grown profits and dividends at a 13-15% annual pace over the last 10 years earning a 20%+ rate of return on equity.  The company should sustain its growth via:

(1) growth of safety needle-free products.  BDX is a world leader in this market which is growing at a 12% annual rate globally.  Recently, the European Union adopted safety requirements that will have positive impact on needle sales in Europe,

(2)  the safety products are sold at premium prices yet have a very low cost of production, thereby improving margins,

(3) new product innovation and introduction,

(4) a newly instituted cost containment program,

(5) strong cash flow allows a continuing stock buy back program,

(6) international expansion,

(7) acquisitions.

Negatives:

(1) high unemployment reduces the demand for medical care, in particular, testing,

(2) highly competitive industry,

(3) its international operations subject to risk of losses from currency fluctuations,

(4) rising raw material costs.

BDX is rated A++ by Value Line, has a debt to equity ratio of about 47% and its stock yields 2.4%.

  Statistical Summary

                Stock      Dividend         Payout      # Increases 

               Yield      Growth Rate     Ratio         Since 2002

BDX           2.4%          11               32%             10

Ind Ave       1.5              6*              23                NA

                Debt/                       EPS Down       Net        Value Line

               Equity         ROE      Since 2002      Margin       Rating

BDX         47%            26%            2                15%           A++

Ind Ave     41               20             NA               18              NA

*over one half of companies in BDX industry do not pay dividends

     Chart

            Note: BDX stock made decent progress off its November 2008 low, surpassing the downtrend off its January 2008 high (straight red line) and the November 2008 trading high  (green line).  Long term BDX is in a trading range (blue lines).  Intermediate term, it is in a trading range (the lower boundary is the purple line, the upper boundary is the upper blue line).  The wiggly red line is the 50 day moving average.  The Aggressive Growth Portfolio owns a 75% position in BDX.  The upper boundary of its Buy Value Range is $59; the lower boundary of its Sell Half Range is $109.

http://finance.yahoo.com/q?s=BDX

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Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.