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Masimo Corporation (MASI - Free Report) , a Zacks Rank #1 (Strong Buy), has benefitted from a resurgence in the health care sector. After falling markedly during last year’s bear market, the stock has hit a series of 52-week highs this year on increasing volume. Shares continue to display relative strength as buying pressure accumulates in this market leader.
MASI is part of the Zacks Medical – Instruments industry group, which ranks in the top 43% out of more than 250 Zacks Ranked Industries.
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. Note the favorable characteristics for this group below:
Image Source: Zacks Investment Research
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Masimo Corp. develops, manufactures, and markets various patient monitoring technologies along with automation and connectivity solutions. Its medical products offer unique ways to monitor oxygen levels, hemoglobin concentration, respiration rate, and brain function. In addition, MASI provides patient position and activity tracking, neuromodulation technologies, and telehealth solutions.
MASI provides its products through direct sales force, distributors, and original equipment manufacturers to hospitals, long-term care facilities, physician offices, emergency medical services, and through e-commerce wellness sites.
Earnings Trends and Future Estimates
MASI has built up an impressive earnings history, surpassing earnings estimates in each of the last four quarters. Back in February, the company reported Q4 earnings of $1.32/share, a 12.82% surprise over the $1.17 consensus estimate.
MASI has delivered a trailing four-quarter average earnings surprise of 9.02%. Consistently beating earnings estimates is a recipe for outperformance.
The health solutions growth engine is expected to remain hot this year, as analysts covering MASI have increased their EPS estimates recently. Full-year estimates have been raised by +8.7% in the past 60 days. The 2023 Zacks Consensus EPS Estimate now stands at $4.75/share, reflecting potential growth of 3.49% relative to last year. Sales are anticipated to rise 19.52% to $2.43 billion.
Image Source: Zacks Investment Research
Let’s Get Technical
MASI shares have advanced over 75% since bottoming out late last year. Only stocks that are in extremely powerful uptrends are able to make this type of move while the major market indices continue their choppy price action. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of higher highs. With both strong fundamentals and technicals, MASI is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Masimo Corp. has recently witnessed positive revisions. As long as this trend remains intact (and MASI continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Bottom Line
Backed by a leading industry group and robust history of earnings beats, it’s not difficult to see why this company is a compelling investment. Solid institutional buying should continue to provide a tailwind for the stock price. Increasing volume at recent breakout levels is another bullish sign.
Robust fundamentals combined with a strong technical trend certainly justify adding shares to the mix. Investors would be wise to consider MASI as a portfolio candidate if they haven’t already done so.
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Bull of the Day: Masimo Corp. (MASI)
Masimo Corporation (MASI - Free Report) , a Zacks Rank #1 (Strong Buy), has benefitted from a resurgence in the health care sector. After falling markedly during last year’s bear market, the stock has hit a series of 52-week highs this year on increasing volume. Shares continue to display relative strength as buying pressure accumulates in this market leader.
MASI is part of the Zacks Medical – Instruments industry group, which ranks in the top 43% out of more than 250 Zacks Ranked Industries.
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1. Note the favorable characteristics for this group below:
Image Source: Zacks Investment Research
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Masimo Corp. develops, manufactures, and markets various patient monitoring technologies along with automation and connectivity solutions. Its medical products offer unique ways to monitor oxygen levels, hemoglobin concentration, respiration rate, and brain function. In addition, MASI provides patient position and activity tracking, neuromodulation technologies, and telehealth solutions.
MASI provides its products through direct sales force, distributors, and original equipment manufacturers to hospitals, long-term care facilities, physician offices, emergency medical services, and through e-commerce wellness sites.
Earnings Trends and Future Estimates
MASI has built up an impressive earnings history, surpassing earnings estimates in each of the last four quarters. Back in February, the company reported Q4 earnings of $1.32/share, a 12.82% surprise over the $1.17 consensus estimate.
MASI has delivered a trailing four-quarter average earnings surprise of 9.02%. Consistently beating earnings estimates is a recipe for outperformance.
The health solutions growth engine is expected to remain hot this year, as analysts covering MASI have increased their EPS estimates recently. Full-year estimates have been raised by +8.7% in the past 60 days. The 2023 Zacks Consensus EPS Estimate now stands at $4.75/share, reflecting potential growth of 3.49% relative to last year. Sales are anticipated to rise 19.52% to $2.43 billion.
Image Source: Zacks Investment Research
Let’s Get Technical
MASI shares have advanced over 75% since bottoming out late last year. Only stocks that are in extremely powerful uptrends are able to make this type of move while the major market indices continue their choppy price action. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how both the 50-day (blue line) and 200-day (red line) moving averages are sloping up. The stock has been making a series of higher highs. With both strong fundamentals and technicals, MASI is poised to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Masimo Corp. has recently witnessed positive revisions. As long as this trend remains intact (and MASI continues to deliver earnings beats), the stock will likely continue its bullish run this year.
Bottom Line
Backed by a leading industry group and robust history of earnings beats, it’s not difficult to see why this company is a compelling investment. Solid institutional buying should continue to provide a tailwind for the stock price. Increasing volume at recent breakout levels is another bullish sign.
Robust fundamentals combined with a strong technical trend certainly justify adding shares to the mix. Investors would be wise to consider MASI as a portfolio candidate if they haven’t already done so.