The health care sector can be daunting for some investors, and there are some good reasons why many people won’t go near health care stocks. First, the health care laws have been changing constantly (how many times has Obamacare been changed?), and it is hard to say with any degree of certainty how the changing laws will affect these companies’ bottom lines. Also, when a lot of people think of health care they think of biotech companies, which more often than not make up the entire list of “top 10 most volatile” on any given day.
Having said all of that, there are ways to get exposure to the lucrative health care sector while maintaining a low risk level. My favorite way to do this is by investing in the companies that make the equipment that the industry needs, such as Medtronic, Inc. (NYSE:MDT). While there are several great options in the industry — and we’ll talk about some of the others a little later — let’s look at why I believe Medtronic, Inc. (NYSE:MDT) is a great option for your portfolio.
What it does
Medtronic, Inc. (NYSE:MDT) is a leader in several categories of medical equipment, including pacemakers, defibrillators, and orthopedic devices. In fact, Medtronic, Inc. (NYSE:MDT) is the world’s largest medical technology company, with a market capitalization of around $56 billion. The company produces an extremely wide variety of products for many areas of the medical fields, and sales are almost $17 billion annually.
One of the main reasons I love Medtronic, Inc. (NYSE:MDT) as a long-term investment can be summed up in one word: consistency. The company has grown its sales (and earnings) very steadily, as can be seen by looking at a chart of the past decade’s revenues:
(Note: Growth has slowed down a bit since the recession, but since 2009 has resumed and continues to accelerate toward old growth rates.)
The company grows by a combination of growing the sales of its current products, as well as through strategic acquisitions, which add even more diversity to the company’s product portfolio.
The company plans to grow its market share and improve its operating efficiency over the next several years. In my opinion, the company’s primary growth focus should be to grow its international business, which was the main reason the company beat estimates during its last quarter.