5. Medtronic plc (NYSE:MDT)
Number of Hedge Fund Holders: 60
Talking about stocks that are deep discounts, Cramer mentioned Medtronic plc (NYSE:MDT) and said:
“… Which brings me to Medtronic. Yeah, the medical device company that’s focused on cardiovascular disease, neuroscience, robotic surgery, and diabetes. Full disclosure, Medtronic’s been a long-term underperformer, up just 12% over the past decade. The stock had a big run during the early portion of the pandemic, reaching new all-time highs, but the gains didn’t last. By the time Medtronic bottomed in late 2023, the stock was actually below where it traded in March of 2020 during the depths of the Covid crash. That’s miserable. But I’m interested in Medtronic here because the company seems to be making a turn, getting back its momentum from the recent spate of weakness in healthcare. In late October, the stock had reached its highest level since August 2022. But in the weeks since, Medtronic’s plunged down 12% from that high.
You know what? It’s exhausting, but I think it’s a steal. Medtronic’s had a bunch of successful product launches in recent quarters with around 120 product approvals over the past 12 months in key geographies. Very exciting stuff in transcatheter aortic valve replacement, pulsed field ablation, and leadless pacemakers. Not to mention new functionality for their Hugo robotic surgery platform, which I find very interesting, but not a lot of people are talking about. This wave of innovation has translated into much better numbers over the past couple of years, starting with eight straight quarters of mid-single-digit organic sales growth. Medtronic’s earnings were basically flat in the last full fiscal year, which ended in April but in the current 2025 fiscal year, the earnings are expected to grow by almost 5%.
And if you believe the consensus estimates, that should accelerate to 7% in fiscal 2026 and 8% in fiscal 2027. When Medtronic reported its most recent numbers in mid-November, the stock sold off a bit, but the actual quarter was strong. Management even raised their full-year organic sales growth forecast and their earnings forecast. So I’d be looking to buy Medtronic in the weakness, but the stock’s selling for just under 14 times next year’s earnings estimates. That’s pretty amazing. It’s one of the cheapest names in the medtech group and hey, Medtronic’s paying you to wait for a comeback. It’s got a bountiful 3.4% dividend yield, very safe, best in the medtech space by a wide margin.”
Medtronic (NYSE:MDT), a global leader in medical technology, is engaged in the development and sale of a wide array of medical devices and therapies. The company reported solid growth for the second quarter of fiscal year 2025, with total revenue reaching $8.4 billion, up 5.3% from the previous year. The Cardiovascular division saw a 6.1% revenue increase, while the Neuroscience Portfolio grew by 7.1%. The Medical Surgical Portfolio rose 1.2%, and the Diabetes segment posted a 12.4% revenue increase, contributing to the company’s overall strong performance.
In October, it received approval from the U.S. Food and Drug Administration (FDA) for its Affera Mapping and Ablation System. This system is designed to treat persistent atrial fibrillation and a specific type of atrial flutter. Additionally, during the company’s second-quarter earnings call, Chair and CEO Geoff Martha revealed that the company plans to submit its Hugo surgical robot to the FDA in the first quarter of 2025.
Moreover, Medtronic (NYSE:MDT) raised its forecast for organic revenue growth to a range of 4.75% to 5%, up from the previous estimate of 4.5% to 5%. In addition, the company revised its diluted non-GAAP EPS guidance for FY25, increasing the range to $5.44 to $5.50, compared to the earlier projection of $5.42 to $5.50.