In this piece we will take a look at the five best medical device stocks to buy now. If you want to learn more about the industry and find out about more stocks, then take a look at 12 Best Medical Device Stocks To Buy Now.
5. Illumina, Inc. (NASDAQ:ILMN)
Number of Hedge Fund Holders: 54
Illumina, Inc. (NASDAQ:ILMN) provides instruments and other devices that are used in genetic analysis and cancer detection services. The company is headquartered in San Diego, California, United States.
Illumina, Inc. (NASDAQ:ILMN) is the world leader in the crucial area of gene sequencing, as the company commands a 90% market share. For its fiscal year 2022, the company aims to grow its revenues by as much as 16%, and its total addressable markets stand at $22 billion, leaving it plenty of room for further growth. Looking toward the future, consensus estimates project a strong 19% revenue CAGR for Illumina, Inc. (NASDAQ:ILMN) over the next three years.
Canaccord kept a $520 price target for the company in July 2022, as it highlighted that Illumina, Inc. (NASDAQ:ILMN)’s core strengths are often overlooked. 54 of the 912 hedge funds part of Insider Monkey’s Q1 2022 poll had bought the company’s shares.
Illumina, Inc. (NASDAQ:ILMN)’s largest investor is Guardian Capital’s GuardCap Asset Management which owns 1.3 million shares that are worth $476 million.
In a fresh Q2 2022 investor letter, Ensemble Capital mentioned the company and stated that:
Illumina has 90% market share in the key technology platform know as gene sequencing that enables a wide range of genetic research and clinical applications. You can learn more about our full thesis on the company here. The company sells some of their equipment into China, where COVID related shutdowns is temporarily impacting sales. However, we don’t believe that China, or any country around the globe, has any intention of backing away from the long-term opportunity to use genetic research and applications to radically improve human health. For instance, the novel MRNA vaccines developed for COVID (the virus was sequenced on Illumina equipment) have demonstrated a broad new class of vaccines for development while at the same time major strides are being made in combatting cancer using genetic testing.
4. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 54
Medtronic plc (NYSE:MDT) is an Irish company that sells several devices such as pacemakers, cardiac monitor systems, pulmonary valves, and valve replacement products. It is headquartered in Dublin.
Not only have Medtronic plc (NYSE:MDT)’s sales doubled over the last decade, but the company has also increased its non-GAAP EPS by more than 45% over the same time period. This doesn’t seem to be the end of it, as the firm also has more than 200 products in its pipeline. To further sweeten the deal, Medtronic plc (NYSE:MDT) also pays a 68 cent dividend for a 2.9% yield.
Insider Monkey’s 912 hedge fund poll for this year’s first quarter showed that 54 had bought the company’s shares.
Out of these, Ric Dillon’s Diamond Hill Capital has the largest stake in Medtronic plc (NYSE:MDT) through holding 4 million shares worth $456 million.
Polen Capital mentioned the company in its Q1 2022 investor letter. Here is what the fund said:
“Ireland-based Medtronic is a leading health care company focused on supplying many important life-saving devices like pacemakers, defibrillators, and insulin pumps. This is another company with attractive pricing power and a business model that can hold up well during inflationary periods. Medtronic has increased market share across almost 70% of its portfolio since the start of the pandemic, which is a higher percentage than even before the pandemic. With growth-oriented companies falling out of favor over the quarter, the stock’s relatively discounted valuation (at approximately 19x earnings) also bolstered its performance.”
3. Intuitive Surgical, Inc. (NASDAQ:ISRG)
Number of Hedge Fund Holders: 65
Intuitive Surgical, Inc. (NASDAQ:ISRG) offers surgical systems for minimally invasive approaches and core instrumentation for its surgical systems. It is headquartered in Sunnyvale, California, United States.
Intuitive Surgical, Inc. (NASDAQ:ISRG)’s bullish price targets see the share price at $270 per share, which is promising especially due to the fact that the company is a market leader in robotic surgery systems. To further woo investors, the firm has generated $1 billion in operating cash flow since 2016 and it currently has $4 billion in cash with no debt. With a forward P/E ratio of 4.56, the firm is also a growth stock. The firm also made it into Citi’s list of growth stocks during a recession in May 2022, with its cash flow having a 10 year CAGR of 20.6%.
65 of the 912 hedge funds polled by Insider Monkey for this year’s March quarter had invested in the company.
Intuitive Surgical, Inc. (NASDAQ:ISRG)’s largest investor is Ken Fisher’s Fisher Asset Management which owns 4.4 million shares that are worth $1.3 billion.
ClearBridge Investments mentioned the firm in its Q4 2021 investor letter and stated:
“Intuitive Surgical, a maker of robotic instruments for soft tissue surgery, was another new health care addition. The market for soft tissue procedures is enormous, including those performed with the aid of the company’s DaVinci machines, whose three-dimensional imaging capabilities require smaller incisions, resulting in less nerve damage and bleeding and shorter patient stays. DaVinci machines are a $1 million-plus investment by hospitals that can be run continuously through the day, allowing for a greater number of procedures with less physician fatigue. Surgeons are trained on the device from medical school and residency on up. Combining the related training and supply chains, these purchases are very sticky. We see the opportunity for Intuitive Surgical to benefit from more indications for the devices, procedure growth, and greater sales in hospitals and surgical centers.”
2. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 68
Abbott Laboratories (NYSE:ABT) is one of the oldest health care companies in the world as it was founded in 1888 and is based in America. The company offers a host of medical devices such as testing kits, laboratory systems, and molecular diagnostics systems.
Abbott Laboratories (NYSE:ABT) is expected to strongly benefit from its coronavirus testing kits which saw the company raise its revenue guidance for these kits to $6.1 billion in July 2022. Additionally, the company will benefit from $21 billion in supplementary spending for COVID testing kits approved by the U.S. Senate in July 2022. It also pays a 47 cent dividend for a 1.72% yield.
Insider Monkey’s Q1 2022 survey of 912 hedge funds revealed that 65 had bought Abbott Laboratories (NYSE:ABT)’s shares.
Out of these, Ken Fisher’s Fisher Asset Management is the company’s largest investor through a $1 billion stake that comes through 9 million shares.
Diamond Hill Capital mentioned the company in its Q1 2022 investor letter. Here is what the fund said:
“Abbott Labs announced a recall of its infant formula brand Similac® in the US. Though the recall will impact near-term revenues, we are not concerned about any long-term impacts. We remain optimistic about the company’s prospects over the long run because, in our view, it is one of the highest quality names in health care with a talented management team that makes smart capital allocation decisions. Abbott also has leading health care and consumer franchises with a particularly strong competitive position in the medical device business. Abbott continues to launch innovative products in key strategic areas (such as diabetes, structural heart and diagnostics), which should help drive not only revenue growth but margin expansion.”
1. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ) is a company that provides both general use medical products such as tampons and band aids, and specialized products such as electrophysiology systems and neurovascular care products. The company is headquartered in New Brunswick, New Jersey, United States.
Despite its scope and scale, Johnson & Johnson (NYSE:JNJ) pockets 48 cents on the dollar as its profits, with 30% coming from its medical devices business. Additionally, the company has paid 15x of its initial investments as dividends over the past 36 years and provided 6x in returns since 2013. It pays a strong $1.13 dividend for a 2.59% yield.
Insider Monkey took a look at 912 hedge funds for this year’s first quarter and found out that 83 had invested in Johnson & Johnson (NYSE:JNJ).
Johnson & Johnson (NYSE:JNJ)’s largest investor is Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital which owns 6.6 million shares that are worth $1.1 billion.
Disclosure: None. You can also take a look at 10 Important Energy Stocks Making Moves After Earnings and 10 Best Data Center Stocks To Invest In.
