Medical device-maker Stryker reported second-quarter numbers last week. The results were fine, and the stock moved to a new all-time high above $270 per share.
Vestact-watchers will recall that we added them to our recommended portfolio back in May 2014. At that point they cost about $75 per share. Our buy-thesis then, remains the same as now: increasing medical spending by boomers.
Stryker reports its numbers in three main segments: orthopaedic (knees and hips), surgical tools (including endoscopy) and neurological technologies. All three divisions did well. Post-Covid sales are looking good, as elective surgeries return in most major markets. Management indicated that profits in the year ahead would be higher than expected.
I am increasingly positive about the investment prospects of the whole medical devices sector. These companies all operate at the high-margin end of the healthcare sector, and the patenting and approval process is much simpler than for pharmaceuticals (drugs).
In addition to Stryker, we like that Johnson & Johnson also has a big medical devices business. Illumina is another company we recommend. Further options to consider are Intuitive Surgical, Align Technologies and EssilorLuxottica.