Rochester Medical Corporation (ROCM), C.R. Bard, Inc. (BCR), Teleflex Incorporated (TFX): Finding Strength in Medical Supplies

Page 1 of 2

Teleflex Incorporated (NYSE:TFX)As of late I have been looking to take advantage of a few major themes set to accelerate over the upcoming decades. In my recent articles I have taken a look a companies poised to benefit from the drastic rise in healthcare demand. The surge in demand will be fueled by our aging population in combination with greater accessibility for the masses. I continued this search last weekend and stumbled upon a few interesting small-cap growth opportunities in the medical supplies industry.

From a broad viewpoint the entire medical supplies industry should be helped by numerous tailwinds. The baby boomer population isn’t getting any younger, but fortunately for these folks, life expectancy rates are getting longer. According to the U.S. Census Bureau just under a decade ago, senior citizens accounted for only 12% of the American population. By 2050, senior populations are expected to rise drastically to 21%. While we are living longer, chronic medical conditions aren’t going anywhere. Some estimates say that by 2030, more than 170 million Americans will be affected by chronic conditions, thus demanding healthcare services. You can’t have healthcare services without healthcare supplies can you? Lets take a look at three companies to consider as an ancillary play on rising healthcare demand.

Catheter King

Up first is Rochester Medical Corporation (NASDAQ:ROCM), a company that specializes in the niche catheter market. Rochester Medical Corporation (NASDAQ:ROCM) oversees the development, manufacturing and marketing of a range of PVC-free and latex-free urinary continence and urine drainage care products for the extended care and acute care markets. While there is a long list of reasons patients experience urinary continence, the likely causes are typically age related. As we get older, the bladder muscle weakens, thus the bladder’s capacity to store urine shrinks leading to an increase in overactive bladder symptoms. While the company does trade at a rich forward earnings multiple, 31 times, analysts are expecting great growth. This year the company is expected to grow 109%, leading into 45% growth the year after. The company differentiates itself from competition by offering patented all-silicon designs. With Rochester Medical Corporation (NASDAQ:ROCM)‘s technology, healthcare providers can eliminate allergens, toxins, and disposal concerns that may be associated with latex or PVC catheters. As a result, its pricing power in this specific niche remains high. I see the company sustaining good growth well into the next three decades as a result of both demand increases and strong pricing power.

Diversified Supplies

Next up, C.R. Bard, Inc. (NYSE:BCR) is a cost-conscious developer, manufacturer, and marketer of innovative, life-enhancing medical technologies in the fields of Vascular, Urology, Oncology, and Surgical Specialty products. C.R. Bard, Inc. (NYSE:BCR) markets its products to a broad range of healthcare providers, including hospitals and long term care providers. Similar to Rochester Medical Corporation (NASDAQ:ROCM), the company offers a range of urinary continence products in addition to endoscopic, gastrointestinal, and biopsy tools. C.R. Bard, Inc. (NYSE:BCR) is set to benefit from greater healthcare accessibility due to the single patient focus of its products. On a valuation basis this company is far less expensive with only a 17 times forward earnings multiple. While growth may be slightly slower, the product portfolio is more diversified. Earlier this month management announced it will raise its quarterly dividend in addition to the start of a $500 million share buyback.

Page 1 of 2