Stryker Q3 - Inline With Expectations

A friendly client of ours forwarded me a quarterly market commentary from a US-based asset manager last night. The firm is bearish, concerned about market levels and advising clients to sell stocks. They say that avoiding losing money is better than missing opportunities. They advise the buying of gold, silver and US Treasuries and the hoarding of lots of cash. Their clients must be glumly watching as the market makes new all-time highs?! As it goes higher, people of a bearish inclination become even more keen to sell.

I find these wishy-washy "sell now because macro risks are rising" arguments very unpersuasive. There are always a few big issues knocking about for bearish market pundits to worry about. In my view we have to keep our eyes on the prize - owning good companies in the parts of the global economy that are expanding. Accumulate quality!

One such good company to buy and hold is Stryker. It is a market leader in the high growth medical devices and surgical equipment sector and is based in Kalamazoo, Michigan. It has a market capitalisation of $82 billion and we have owned it for clients since 2013, when it traded at around $76 per share. It closed last night at $220.53 per share.

Stryker reported third quarter numbers last night. Organic sales growth across all three parts of their business grew at an annualised rate of 8.6%. That's great, and reflects ongoing spending by people on replacing hips, knees and other body parts. See the picture below, of what your next knee might look like inside.

Earnings per share were $1.91, in line with expectations. Revenue came in at $3.6 billion which was also about right. Earnings guidance for the year ahead was nudged a little higher, although currency changes might affect overseas (non-US) sales. The CEO, Kevin Lobo, said "We expect this momentum to continue, which positions us well to deliver above the high end of our initial guidance range for both organic sales and adjusted EPS."

Sounds good to me. Accumulate this one, and ignore the chatter about whether the overall market is high, low, upside down or sideways.