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Becton Dickinson makes all sorts of medical devices and instruments, including scalpels, syringes, and diagnostic equipment.
Becton, Dickinson, & Company (BDX), founded in 1897, is a rock solid, wide moat company in the healthcare industry that makes surgical tools, needles, and other medical products. I see today’s current healthcare fears as a great opportunity to be greedy and buy this wonderful business at a fair-to-cheap price.Over the 5 years, BDX has averaged very impressive 17% annual returns on capital. (89th percentile) Over past 10 years, BDX never returned less than 11% returns on capital. (11% in 2004) BDX has grown earnings at a 10yr avg of 14.2% and successfully grew earnings 9 out of the past 10 years. (2004 being the only down year) Free cash flow has grown at 9.5% compounded over the past decade.I’ll conservatively forecast EPS growth at 9% per yr (40% lower BDX's 10 yr avg) over the next 3-5 years. Adding in 2% per year in reinvested dividends, I’m expecting 11% compounded annual returns going forward, assuming P/E remains about the same.BDX is currently selling at 14x earnings, and more importantly, 14x free cash flow. I think that’s a great price for this 115 year old company with a bright future. Becton, Dickinson, & Company (BDX), has prospered through two World Wars, the Great Depression, about 15 recessions, and emerged from it all as a top company. I don't think Obamacare or this recession is going to be the end of that success. Outperform.
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