CR Bard (BCR) 2013 Review

C.R. Bard designs, manufactures, packages and distributes medical device products in four markets: vascular (angioplasty catheters and stents, grafts and blood oxygenation), urology (catheters, urine collection systems and incontinence aids), oncology (gastroenterological, bladder, prostate tests) and surgical specialties (hernia repair, orthopedic and laparoscopic products). The company produces a 20%+ return on equity and has grown earnings at approximately 16% for the past 10 years. Dividend growth has been slower but should pick up in the next 2 to 3 years.

As you can tell by its product mix, Bard is well situated to benefit from an aging population and should be able to maintain above average profit and dividend growth because:

(1) the company has a complete line of products of cost effective, high margin products that generally first or second in market share and are primarily single use,

(2) a top notch R&D effort producing exciting a strong pipeline of new high margin proprietary products,

(3) strategic acquisitions to complement and enhance its current product line,

(4) an expanding marketing effort,

(5) an aggressive cost control program,

(6) a share buy back program

 Negatives:

(1) an intensively competitive industry,

(2) implementation of the Medical Device Tax,

(3) it is in a highly regulated industry.

BCR’s stock has been a stellar performer in our Portfolio having traded well past our Sell Half Price and is a great example of why we only sell half of a well performing position as long as the company continues to meet all our financial hurdles. While the current yield on the stock is only .7%, it yields 5% on our cost--again another great example of why we want to own the stocks of companies who consistently raise their dividend.   The company is rated A++ by Value Line and has a 43% debt to equity ratio.

Statistical Summary

                 Stock      Dividend         Payout      # Increases  

                Yield      Growth Rate     Ratio       Since 2003

 

BCR          .7%             5%               10%             10

Ind Ave     1.7               6*                24               NA

                 Debt/                        EPS Down       Net        Value Line

                Equity         ROE      Since 2003      Margin       Rating

BCR          43%            29%             0                20%           A++

Ind Ave      23               14              NA              14              NA

*over 50% of the companies in this industry don’t pay a dividend

     Chart

            Note: BCR stock made good progress off the March 2009 low, surpassing the downtrend off its September 2009 high (straight red line) and the November 2008 trading high (green line).  Long term, BCR 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 red wiggly line is the 50 day moving average.  The Dividend Growth Portfolio owns a 75% position in BCR by virtue of having Sold Half in 2008 and stock continuing to advance in price.  The upper boundary of its Buy Value Range is $113; the lower boundary of its Sell Half Range is $180.

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

10/13