5 Medical Equipment Stocks With Prospects For Strong Earnings Growth

Michael Teague |

medical equipment 263x350With the Patient Protection and Affordable Care Act less than six months away from full implementation, there has been a great deal of talk about how various sectors of the healthcare industry might benefit from the increased involvement of the federal government in provision of medical services.

Most of the talk has centered on companies responsible for the provision of healthcare insurance, all of whom have been invited to participate in the healthcare exchanges that the ACA seeks to establish in order to ostensibly encourage competition and bring down costs.

But the Affordable Care Act could not only boost insurance providers, as the millions of Americans who will be joining the health insurance marketplace will surely increase the need for medical services and products.

The following five stocks were selected from the American medical appliances and equipment industry, based on market capitalization (over $300 million). Furthermore, relatively strong earnings-per-share growth expectations for the current year as well as next year, suggests that these companies may have a place in portfolios looking for healthcare-sector stocks with longer-term growth potential and less risk than, say, biotech stocks. Furthermore, all five of these stocks are on average rated a “strong buy” by analysts.

Globus Medical Inc. (GMED)

The spinal implant manufacturer has a market cap of $1.52 billion, with shares trading at $16.77, up 58 percent year-to-date. The company currently earns $0.82 per share, a figure that is expected to increase over 19 percent this year, and another 13 percent the next year.

Cyberonics Inc. (CYBX)

The company specializes in neuromodulation, a process that treats problems such as severe depression and certain types of epilepsy at the neurological level through the use of electrical signals. Cyberonics has a market cap of $1.44 billion, with shares trading at $51.78, down 0.50 percent in 2013, but up 16.5 percent over the past 12 months. Earnings of 1.65 per share is expected to increase nearly 30 percent this year, and another 15.5 percent in the next.

Cynosure Inc. (CYNO)

The developer and manufacturer of cosmetic medical treatments has a market cap of $1.44 billion, with shares trading at $52.04, down 0.5 percent in 2013, but up 16.5 percent over the past 12 months. Earnings of $0.79 per share are expected to increase a whopping 443.5 percent in the current year, and another 73 percent next year.

PhotoMedex Inc. (PHMD)

A manufacturer of medical dermatology products, PhotoMedex has a market cap of $322.37 million with shares currently trading at $15.58, up 7.3 percent in 2013, and just over 22 percent in the past 12 months. The company’s earnings per share figure, currently at $1.16, is set to increase nearly 28 percent in the current year, and another 7.5 in the next year.

Invacare Corporation (IVC)

The maker of products designed for home and long-term care has a market cap of $464.49 million, with shares trading at $14.46, down 10.5 percent year-to-date and 0.75 percent over the past year. The company is currently losing $0.58 per share, but this figure is expected to improve by over 55 percent this year, and another 208 percent in 2014.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
CYBX Cyberonics Inc. n/a n/a n/a 0
GMED Globus Medical Inc. Class A 24.16 0.56 2.37 1,069,085
CYNO Cynosure Inc. 44.80 0.25 0.56 156,449
PHMD PhotoMedex Inc. 4.72 0.98 26.20 1,231,075
IVC Invacare Corporation 12.45 0.20 1.63 161,735
RAIL Freightcar America Inc. 15.53 -0.22 -1.40 94,502

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