Stryker: A Hip Choice in Orthopedics

06/16/2016 7:00 am EST


Leo Fasciocco

Investment Columnist and Publisher, Ticker Tape Digest

Our latest featured breakout stock provides medical services involving orthopedics, such as implants for use in hip and knee joint replacements, and trauma and extremities surgeries, explains Leo Fasciocco, editor of Ticker Tape Digest.

Stryker (SYK), which annual revenues of $10 billion, also provides surgical equipment and surgical navigation systems, endoscopic and communications systems, patient handling and emergency medical equipment.

Over the past 12 months, the stock has appreciated 20% versus a 1% rise for the overall stock market. The stock's accumulation and distribution line is trending higher showing good underlying buying.

The stock hit a peak of $113 in February and then put in a flat base above its rising 50-day moving average line. The recent breakout looks solid coming with a widening of the daily spread.

This year, analysts are forecasting a 12% increase in net to $5.76 a share from $5.12 a year before. The stock sells with a price-earnings ratio of 20. We see that as reasonable.
Net for the upcoming second quarter should increase 13% to $1.36 a share from $1.20 a year ago. The highest estimate on the Street is at $1.39 a share.

Looking out to 2017, the Street is predicting an 11% rise in net to $6.41 a share from the anticipated $5.76 this year.

Institutional sponsorship is excellent. Many funds with 4-star or better ratings hold the stock. One of the largest fund buyers recently was the T. Rowe Price Growth Stock Fund, which purchased 3.2 million shares.

We are targeting SYK for a move to $135 a share off this breakout. A protective stop can be placed near $110.

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By Leo Fasciocco, Editor of Ticker Tape Digest

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