June 24, 2011
Written By J. Royden Ward
“Stryker Corp. (SYK) shares are a bargain at 15.4 times 12-month forward EPS. Additional acquisitions and new products could boost sales and earnings more than expected. We believe the company’s shares will reach our Minimum Sell Price of 90.92 within the next two to three years.
“SYK is very low risk. Stryker is the leading orthopedic products maker in the world, and is well diversified with its offerings of surgical instruments, stretchers and other medical devices and equipment. Orthopedic products include hip and knee replacements and spinal and craniomaxillofacial implants. After sales and earnings growth stalled in 2009, Stryker is back to producing steady growth. Sales increased 11% and EPS rose 20% during the latest 12-month period. Sales and earnings will likely increase 11% during the next 12 months, Stryker acquired several companies and, at the same time, gained market share for its existing products. The new U.S. healthcare plan should help the company as hospitals receive funding to buy much-needed equipment.”
J. Royden Ward, Cabot Benjamin Graham Value Letter, 6/11