Reprinted from my http://www.uncommonwisdomdaily.com blog
The sport of kings, horse-racing, won’t celebrate another Triple-Crown winner again until next spring.
However, if you’re looking for a thoroughbred to bet on in the meantime — one that can pay off for you all year long, and with much-more consistency — the stock market is still the best place for your cash.
Although there’s a big difference between putting a few dollars on a horse with a pedigree and allocating a portion of your nest egg to a stock with its own history of performing, the race-horse set can teach us a valuable lesson …
When you think of all the horses that qualify for the Kentucky Derby, Preakness and Belmont Stakes, consider that their handlers own or train many more thoroughbreds than you’ll ever see at these elite events. In other words, only the single-best in the stable get picked to run in the big-buck events.
That brings to mind a company that recently oversaw a “stable” of businesses … and then narrowed it down to the best of the lot to compete and even thrive in today’s competitive economic environment.
An investment in this stock could pay off better than a day at the race track. Best of all, you don’t need to break out your fancy hat to watch this one as it gains momentum on its way to the finish line!
The medical field continues to find new ways to help people look younger, but no one has figured out how to make us younger. And so, the population all over the globe continues to age … and demand for surgeries and services to help us live longer continues to surge.
People aged 65 and over now comprise a greater share of the world's population than ever before, and this proportion will increase during the 21st century.
The Medical Instruments & Supplies segment will benefit from the global aging trends. And medical-device-maker Teleflex Inc. (TFX) is one of those beneficiaries.
Just a few years ago, you could accurately define Teleflex as a diversified goods manufacturer for the aerospace, marine and medical industries.
However, during the past few years, the company has shed two of those specialties and channeled its resources into becoming a top global player in the third … a move that’s already starting to pay off … and could pay even-bigger as the world population gets older.
TFX: From Workhorse to Racehorse
Teleflex has taken note of the promising demographics and economics of the medical segment of the economy. To take advantage of it, the company jettisoned its air cargo system equipment division as well as its recreational boating products line.
And now, the Limerick, Pa.-based firm has repositioned itself as a global player to be reckoned with in the medical-devices industry.
Considering that it’s now a $77 stock and climbing, TFX is looking like a force to be reckoned with in the markets as well …
Teleflex has made some smart acquisitions over the past couple of years. Now it makes technologies designed to reduce the total cost of medical procedures, with a focus on improving the safety of patients and providers.
And just where is it finding these customers? You may be surprised to learn …
Where TFX is Making its Money
Teleflex is a leading global provider of specialty medical devices for a range of procedures in critical care and surgery in hospitals and doctor’s offices around the world.
Although the company is based in the United States, 49% of its revenue originates outside our borders. Teleflex has research, production and marketing operations spread across Europe, Asia, Mexico and Canada.
And if you consider the demographics of many developed nations — the United States and Japan being prime examples, where aging populations require more medical services — it is hard to quarrel with the direction the firm has chosen …
But it’s the developing nations that can sustain this business for decades to come.
“We are making targeted geographic investments, especially in markets such as China and Brazil, where the emerging middle class is increasing utilization of healthcare,” Benson F. Smith, TFX’s chairman, president and CEO recently told shareholders.
How Those Investments are Paying Off
During the company’s transition to a purely medical equipment business, revenue growth slowed slightly from a gain of 6.8% in 2011 to 4% ($1.55 billion) in fiscal 2012. These are still solid numbers, and its outlook is even-better for this year.
For fiscal 2013, the company expects revenue growth ranging from 11% to 13% and adjusted diluted earnings-per-share of $4.70 to $4.90. Analysts expect the company to report revenue of $1.73 billion and earnings-per-share of $4.83 for fiscal 2013.
TFX’s shares have more than doubled in the past four years from less than $40 in early 2009 to a recent peak of $87.46 — up 22.6% from their 2012 close. While the stock is off it's high price, it's still up 33% over the last twelve months. (Just for full disclosure, TFX is an active position in our client portfolios at Acamar Global Investments and represents just one of the many stocks that benefit from global trends in the Separate Managed Accounts we service. It's also likely to be included in the Acamar Global Growth Fund we are launching.)
Here’s one quick "fun fact" about Teleflex …
Despite its name, it is neither a telecommunications firm nor a provider of flexible infotech solutions.
In the medical equipment business since 1981, TFX was born in 1943 to produce adjustable cable that expanded telescopically and was flexible for use in World War II Spitfire fighter planes.
The “telescopic” and “flexible” characteristics of its original product were combined into the name Teleflex, which has prevailed through the years and during the many evolutions in this promising firm’s focus.
But don’t let its name throw you off track; this is a supplier to an essential industry that is well on its way to winning a race that doesn’t offer much competition.
That’s my take on it.
Happy Trading!
Rudy
You’ll see that equities are down over the past few weeks, with domestic equities dipping into negative-fund-flow territory during the final week of February.
That’s actually a drop from the pace of a month ago, and may be signaling a top — or at least a pause — in the market’s upward move.
Markets Going Up … Investors Going Away
With economic stats that signal a go-slow recovery, a rapidly appreciated market and declining investor interest in new purchases, it’s not surprising that investors are betting against the U.S. in the form of buying more global-focused stocks or outright shorting names that don’t stand a chance over the long haul.
As I’m preparing an overview of the Dow Jones stocks for my Global Trend Trader members, I’d like to share one idea with you that may merit some added focus — on the downside.
It’s the only Dow-30 stock trading in the single-digits … and one that clearly deserves to go lower.
Alcoa (AA) was recently named by Fortune Magazine as the most-admired metals company in the world for the second-consecutive year.
The magazine gave the firm top rankings in innovation, people management, use of corporate assets, social responsibility, quality of management, financial soundness and long-term investment.
That may be true for the company, but the stock stinks and is likely to sink further.
Remember, as we just saw with Harris Interactive’s poll on some of those very perception points, the companies with the best corporate reputations had some of the lousiest stock performances during the corresponding ratings periods.
Alcoa’s stock performance (or, rather, the lack thereof, as you can see in black in the chart below) seems determined to prove this point.
Alcoa is down nearly 9% over the past 52 weeks