A Pair of Medical Instruments Stocks for Investors: BAX, SYK
Wondering which stocks are likely to be higher than the average stock in a year’s time? Focusing on stocks from companies that provide products or services that people need and will use regardless of the economy is likely to lead investors to some interesting industry groups – and some opportunities that may be hard to beat.
Many of these stocks go under the banner of so-called “recession beaters” – stocks from unglamorous companies that produce the sort of goods we take for granted – or know we can’t live without. This runs the gamut from personal products companies to major drug manufacturers to utilities companies – many of which are among some of the highest rated, Long Term PowerRatings stocks in the market.
Today, we look at two such stocks: Baxter International [BAX@BAX] and Stryker Corporation [SYK@SYK]. Both stocks have Long Term PowerRatings of 8, and sit at the top of the Medical Instruments and Equipment industry group – an industry group with an average Industry PowerRating of 6.
Baxter International is in the business of developing a variety of products to fight a wide range of medical conditions, from cancer and immune disorders to infectious and kidney disease. Based out of Deerfield, Illinois, Baxter International has a modest dividend yield of 1.40, and a P/E of 23.30. The stock is trading within three points of its 52-week high of $65.20.
In its most recent earnings announcement in April, Baxter International beat estimates by two cents. The upside surprise helped extend the stock’s rally from the high 50s to the low 60s this spring. After a pullback in late May, shares of Baxter International are advancing once again and are within one point of their spring highs as of this writing.
Our other medical instruments stock is Stryker Corporation. Stryker Corporation is based out of Kalamazoo, Michigan and specializes in developing products for use in orthopaedics.
In its most recent earnings announcement, Stryker Corporation beat analyst estimates by a penny, which provided a short term boost in the stock this spring. Since then, however, shares of Stryker have remained under pressure, trading below the 200-day moving average and recently moving lower to test the May lows.
Stryker Corporation has a dividend yield of 0.50 and a P/E of 24.40.
As stocks with Long Term PowerRatings of 8, both Baxter International and Stryker belong to that category of stocks which, according to our research, have been higher one year later more than 74% of the time – compared to less than 68% of the time for the average stock.
Moreover, 8-rated stocks have also tended to outperform the average stock after one year. We found that stocks with Long Term PowerRatings of 8 have tended to gain, on average, more than 17% in a year’s time. The average stock, on the other hand, has gained between 12 and 13% over the same time period based on our analysis of stocks between 1995 and 2007.
Whether or not the economy is in – or is headed for – a recession, the message from our Long Term PowerRatings stocks remains clear: seek safety in reliable, high Long Term PowerRatings stocks in industry groups that the public will continue to rely upon – come good times or bad.
Looking for more long-term solutions to your investing problems? Don’t let the volatility of this market lead you to miss out on stocks you’ll be glad to have bought a year from now.
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David Penn is Senior Editor for PowerRatings.net.