Stryker: Poised for a Breakout?

12/27/2002 12:00 am EST

Focus:

Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

Leo Fasciocco, editor of the Ticker Tape Digest, is a noted expert in isolating potential breakout candidates. He notes, "While a stock is still in the basing period, we suggest scaling into positions. Additional buying can then be done once the stock completes its base and breaks out." Here's his latest recommendation for a stock he believes is poised for such a breakout.

"Stryker Corp. (SYK  NYSE) makes surgical products. Its annual revenues are $2.6 billion. Its products include instruments such as drills, saws, ad rasps. Orthopedic implants (including artificial joints, spinal rods, screws, and bone cement) account for about half of sales. The company also provides rehabilitation services in 25 states and its biotech division makes OP-1, a product to grow bone.

"We see a breakout to the upside as a high probability. Technically, SYK set up its base after a strong advance from 44 to 66 from August through November. Another positive is that the basing work so far has been done above a rising 50-day moving average line. That is bullish, indicating the stock remains in a good uptrend. This year, we forecast a 28% increase in net to $1.72 a share from $1.34 a year ago. Going out to next year, we expect profits to climb 21% to $2.07 a share. Insiders were buyers in late November around 61 to 63. They were officers of the company. We rate insider activity as bullish.

"Overall, this stock has everything going for it to breakout on the upside--technicals, tape, earnings, and group strength. We see the stock in an ideal spot to be accumulated as a partial position with the rest of a position to be bought on a breakout over $67.50. We are targeting SYK for a move to $84 within the next six months. A protective stop can be placed near $61."

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