Zimmer: Orthopedic Gains

05/09/2003 12:00 am EST


"The stocks on our buy list have high operating margins that dominate their respective businesses," says Louis Navellier, editor of the Blue Chip Growth Letter.  "Typically, the greater a company's operating margins, the more reliable their corporate earnings. For example, most of the medical-related companies on the buy list will continue to maintain strong earnings growth without any hiccups, thanks in large part to their healthy operating margins."  Here's his latest medical buy.

"Zimmer Holdings (ZMH NYSE), with a market value of $8.9 billion, designs, develops, and manufactures reconstructive orthopedic implants. Technically, these mid-cap stocks will soon be classified as large-cap stocks and will benefit from graduating to a new, larger neighborhood and institutional buying pressure. Zimmer Holdings is in the business of orthopedic products. The company's orthopedic reconstruction implants restore joint function lost due to disease or trauma in joints such as knees, hips, shoulders, and elbows. Trauma products are devices used primarily to reattach or stabilize damaged bone and tissue to support the body's natural healing process.

"Zimmer also makes and markets other products related to orthopedic and general surgery. Zimmer has annual sales over $1 billion and has extremely high after-tax operating margins (nearly 30%).  Zimmer has consistently exceeded analysts' earnings expectations. Even better, Zimmer also has extremely steady earnings growth, which many investors prefer during an uncertain economic environment. Overall, Zimmer Holdings is a classic example of a company with healthy operating margins that will continue to dominate its business and post smooth, steady earnings regardless of the economic environment."

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