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Player Avatar NeuroNerd (< 20) Submitted: 1/3/2011 11:45:09 AM : Outperform Start Price: $34.25 MDT Score: +29.35

Medical device makers like MDT have gotten spanked recently by concerns about pricing pressures and an excise tax stemming from the health care reform bill. The CEO preparing to check out didn't exactly help either. That said, I feel that these concerns are overblown. Pricing pressures or no, MDT has the deepest and widest R&D machine in the industry (which should continue to drive growth in the long run) and a crap-ton of pent-up demand for delayable medical procedures that should bolster revenue and eps in the short run. They also enjoy a substantial moat with their existing products, given the reluctance of doctors to switch to new implantations unless they're shown to be clearly superior. Trading at trailing P/E ~13, forward P/E ~10, and a PEG ~1.2 with an S&P-beating, growing dividend, I believe that MDT will prove to be a long-term winner.

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