Good Monday everyone and welcome to the BCB Cyber Series that takes on the tech stocks that can provide the cyber-fuel we need to pursue our digital wealth passions.
Top Tech Stocks to Buy in Tech: Medtronic
Today, we are returning to Mega-Cap Tech Stocks, and this month that means the world’s largest medical device maker: Medtronic.
Before we get there though, as always, our reminder: with BCB Cyber we dig for the cyber-fuel we need, we are always working to make sure the best of the best, those monster companies in Tech, form a key portion of our portfolios.
For all these mega-cap stocks, just like Investopedia, our core defining feature is that the market cap is over $200 Billion! As always though, we dig deeper still, looking for those companies that are pushed by incredible disruptive tech with a great story, not to mention having a solid base in the numbers.
Before we dive too deep though, we strongly advocate that we don’t act solely on anyone else’s opinion, not even ours! Make sure we are all thinking for ourselves as self-definers and making our own decisions. In the end, the responsibility is on each one of us as individuals. So decide wisely!
Jumping right in now the BCB Cyber way, we cover 3 quick pieces of important information so we can get moving on our day. First, we tackle the story to find out who and what the company is, second, we look at the numbers both positive and negative, and finally we discuss our position on the stock.
This is TS2B, Tech Stock to Buy, Mega-Cap edition, and this week we are going to take on Medtronic, the Dublin, Ireland, device-based medical therapy maker.
BCB Cyber: Mega-Cap Analysis for 01.18.21
1 – STORY
Medtronic
Medtronic is simply one of the most well run, diversified, and healthy company’s we’ve seen. Particularly at the level of a Mega-Cap in Health and Biotechnology! Not only is Medtronic diversified into four aspects of quality health businesses (Cardiac/Vascular, Minimally Invasive Therapies, Restorative Therapies, and Diabetes), the company is also diversified across markets seeking to building a strong base across all humanity.
However, where this company truly excels is in its push to bring forth truly disruptive, yet profoundly helpful technologies. With a large, well qualified and respected emergent product line, the sky is the limit for Medtronic.
Medtronic company info (image gallery above) from JP Morgan Healthcare Conference Presentation January 2021 blended with BCB Cyber Fuel for a whole new experience!
As if being best in class and built on a terrific pipeline that is “the strongest in the companies history” weren’t enough. Medtronic has also broken through and could be considered the top-notch exemplar for all ESG world investors to look for!
2 – BY THE NUMBERS
BCB Cyber loves to follow five specific metrics: Revenue Growth, Forward Price to Earnings Ratio, Return on Assets, Operating Margin, and Debt Considerations.
Starting out, Medtronic is a bit of rule breaker for BCB Cyber as the market cap is slightly under the $200 Billion Mark.
Perhaps more importantly, Medtronic has a forward P/E that is starting to rebalance to where it was before the global health crisis began, as are Price/Book an Price/Sales ratios. The market picture for such large, impactful companies has definitely become more clear and despite the chaos in the world does appear to be settling in.
Medtronic’s revenue numbers continue to be strong despite the global headwinds of the past year. The company has consistently produced numbers in the 28 – 32 Billion Dollar range (above).
One area where there is little continued doubt is in effectiveness and profitability where both are demonstrated (above) to be in quality territory.
Now we turn to the balance sheet where our only concerns start to emerge. While Medtronic does have a quality cash position and a strong Operating Cash Flow (ttm) of $6Billion, we do see that total debt (ttm) has doubled the current cash position and does require a watchful eye to ascertain whether or not this will continue to be manageable.
Diving deeper still into the debt picture (above) we also see that in the last twelve months (ttm) Medtronic did issue a great deal of debt, however this does require the understanding that rates have been extremely low during the health crisis and that shareholder value was not terribly diluted during this period as only a small issuance of capital stock was allocated. Despite the health crisis, Medtronic did manage to navigate the storm with a strong cash flow position that will allow it to handle present and future challenges.
3 – THE BCB CYBER TAKE
As of this morning, on 01.18.21 (Happy Martin Luther King, Jr. day everyone!), my own portfolio has a position of 3.48% in Medtronic with a cost basis (average cost) of $91.35. This is definitely a stock worth buying at the right price and one that BCB Cyber believes to be the right fuel for the fire! In fact, we’d be willing to say its one of the best disruptive tech plays in all of BioTech, definitely a best in class kinda company.
Analysts would definitely seem to agree as Morgan Stanley recently gave Medtronic an upgrade and many others are recommending a buy, particularly given the fact that the stock price does seem to sit in value territory (see below)!
Remember, we are just like the masses, struggling to make ends meet and build our future. So, we start building and keep doing our homework. This is just what we need to start us on our journey toward cyberizing our lives.
BCB Cyber believes in the potential for this risky, tech innovator and loves the story. However, this is definitely a stock worth buying at the right price (we previously said $115/share, but would now move to $120/share given this analysis)!
Remember we at BCB Cyber balance our perspective and cyberize our wealth over a longer term of 5 years or more. We will definitely be looking to add balance to our position, with the right portfolio proportions of between 4 to 5 percent and at the right price. Medtronic, definitely puts the “Tech into med-tech!”
Remember, as always, think for yourself, do your own homework, and cyberize your life with the best in disruptive tech. Learn more in our Wealth Section and dive deeper into Establishing the Baseline on BCB Cyber.com!