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How to Invest in the Hot Medical Device Innovators

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  • (0:30) - The Innovations In The Healthcare Industry
  • (3:10) - Companies Focusing On Medical Devices
  • (11:20) - Finding Small Cap Stocks To Invest In
  • (14:15) - In Depths Look at Vericel Corp. and AxoGen Inc.
  • (24:00) - Episode Roundup:EW, BEAT, PEN, AXGN, IART, VCEL, MDT, MZOR, JNJ
  • Podcast@Zacks.com

 

Welcome to Episode #149 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by Zacks Senior Strategist Kevin Cook, who is also the editor of Zacks newsletter the Healthcare Innovators, to talk about the companies that are innovating in the medical device category.

While a lot of the press goes to companies trying to find cures for cancer or Alzheimer’s, other companies are focusing on devices that are making it easier to treat chronic conditions or perform surgeries.

How can investors find these companies?

And should you be playing for a buyout by one of the big guys?

5 Companies Innovating in Medical Devices

1.       Intuitive Surgical ISGR makes robotic assisted surgical devices called da Vinci Robotic Assisted Surgical Systems. Shares have been on a tear and aren’t cheap, at 53x, but sales are expected to rise 17.9% this year.

2.       BioTelemetry (BEAT - Free Report) has a market cap of $2 billion. It makes wireless heart monitoring devices and has partnered with Apple, and its iWatch, to develop its data system further. In the second quarter, BEAT posted its highest quarterly revenue ever and raised guidance. It’s trading with a forward P/E of 42, but revenue is expected to rise 37% this year.

3.       Edwards Lifesciences (EW - Free Report) makes heart valves. This large cap company has a forward P/E of 36 and is expected to grow earnings by 22% this year. Shares are up another 45% this year as revenue is expected to rise 11%.

4.       Penumbra (PEN - Free Report) makes innovative therapies including catheter focused tools. It has a $5 billion market cap. It recently announced that its Penumbra JET 7 and JET D Reperfusion Catheters would enable physicians to extract thrombus effectively and safely in acute ischemic stroke patients. Sales are expected to rise 27% in 2018 but its P/E is pretty steep, at 434x.

5.       Vericel Corp.  (VCEL - Free Report) develops therapies for the treatment of patients with autologous (patient’s own) cells. In Dec 2016, it got FDA approval for the MACI procedure which uses a third generation autologous cellularized scaffold product that is indicated for the repair of single or multiple symptomatic, full-thickness cartilage defects of the adult knee. This method could be used on patients instead of knee replacement. Sales are expected to be up 27% this year.

All of these stocks are growth stocks as both earnings and revenue are growing in the double digits.

What else do you need to know about investing in companies making cutting edge medical devices and products?

Listen to this week’s podcast to find out.

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