This year, two of my close friends are undergoing serious surgical procedures.
I appreciate your thoughts and prayers for Brad and Sam… (not their real names for privacy reasons, but I’m sure your prayers will get to the right place).
Hopefully the procedures will be successful and the recovery periods will be as painless as possible.
I bring this up because millions of patients around the world are planning to have medical procedures done — many of which were put off during the pandemic.
But now that things are getting back to normal, hospitals can allocate resources to elective (and deferred) surgeries. And as these procedures ramp back up, a few key medical companies are set to grow profits!
Today I want to introduce you to two of those stocks that are currently on my watch list.
Strong Demand for Surgical Equipment
The first stock we’ll cover today is Stryker Corp. (SYK). The company manufactures medical equipment, instruments, supplies and implantable devices.
Stryker specializes in orthopedic implants used for joint replacements.
For roughly two years, many patients who needed to replace hips, knees or other joints simply deferred their procedures. Either the hospitals were too booked with covid cases, or it was deemed too dangerous to have these inpatient procedures.
But now, medical teams are making up for lost time. There’s a large backlog of patients waiting for important surgeries. Which means profits for SYK should remain high for many quarters.
In addition to its high-margin implant business, Stryker’s consumable supply business is also a key profit center. Consumable supplies must be replaced month after month, providing reliable recurring revenue. That’s exactly what investors love to see!
Shares of SYK bottomed in July, well ahead of the rest of the market. And most recently, the stock hit a new all-time high before pulling back in February.
This pullback looks like a great “last chance” to buy SYK before the stock continues its trend higher.
The company is expected to earn $9.99 per share in 2023, and continue growing profits in the years ahead. Wall Street analysts recently started revising expectations higher now that it is clear that SYK’s business is picking back up again.
Surgical Technology Meets Modern Medicine
A second medical stock on my watch list is Intuitive Surgical (ISRG). The company is known for its “da Vinci” robotic system that assists surgeons.
So far, ISRG has installed nearly 7,000 da Vinci systems across the U.S. and around the world. And much like Stryker’s consumables business, ISRG profits from a reliable stream of recurring revenue.
Each system requires disposable accessories and ISRG also provides warranty services for its system. So each time a new system is placed, it means more long-term revenue for ISRG.
Shares of ISRG traded sharply higher in October and November of last year. Investors were excited about the company’s growth as more patients opted to move forward with elective surgeries.
But this year, ISRG has pulled back a bit.
The stock came under pressure when ISRG announced weakness in China. This was due to China’s reassessment of the country’s “zero covid” policy and the resulting surge in covid cases.
This setback should be short-term in nature.
Much like the rest of the world, China will go through a period of spreading infection and eventually herd immunity. And once the process has run its course (likely very soon), elective surgeries will pick back up.
ISRG may have weak Chinese numbers for a quarter or two. But sales to physicians in the rest of the world should remain strong. And China’s growth will pick back up soon.
Tracking the Best Opportunities in Today’s Market
Intuitive Surgical and Stryker are just two examples of stocks on my watch list right now.
Each week, I update a list of 60 actionable stocks that I use for investing my own family’s money.
I would love to share these stock ideas with YOU!
For just $27, you can have access to my watch list of stocks for an entire year. The list includes:
- 20 bullish plays (stocks I expect to trade higher)
- 20 bearish plays (stocks I expect to trade lower)
- 20 income plays (stock I use for cash flow)
Each stock includes notes on the company’s business, earnings, valuations, and thoughts on where the stock could trade. Plus I send out a weekly email with commentary on the market and specific high-priority opportunities.
I’d love for you to give the watch list a try. For a price of just $27, you could recoup your cost many times over with a single investment!
In the meantime, consider adding SYK and ISRG to your own watch list. Both stocks look very attractive in today’s market.
Here’s to growing and protecting your wealth!