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Adding Medtronic to my CAPS portfolio

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August 27, 2010 – Comments (0) | RELATED TICKERS: MDT

 

Barron's recently wrote an extremely bearish article on Medtronic (MDT) titled Should Medtronic Investors Lose Heart?

http://online.barrons.com/article/SB50001424052970204304404575449592362460232.html 

The always interesting Vitaliy Katsenelson subsequently wrote a rebuttal tearing apart Barron's bearish arguments.  

Why Barron's Is Wrong About Medtronic 

http://seekingalpha.com/article/222227-why-barron-s-is-wrong-about-medtronic 

I agree with him that Medtronic is not nearly as messed up as the article claims.

I'm not a big fan of forward earnings, but MDT trades at only 8.2 times forward earnings. And Barron's thinks that's expensive?  Come on.

The company has been absolutely crushed by Mr. Market lately despite the fact that it has increased its earnings by 14% annually and its dividend by 17% annually over the past decade.

Yes, the healthcare sector faces some uncertainty, Medtronic missed last quarter, and it may not be the growth stock that it once was, but I agree with Vitaliy Katsenelson that MDT is a solid buy at this point.  I added MDT to my CAPS portfolio today with a starting price of around $32.50/share.

Deej

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