Intuitive Surgical (ISRG)
By Timothy Lutts, Chief Investment Strategist and Editor of Cabot Stock of the Month
From Cabot Wealth Advisory 4/30/12 Sign up for free Cabot Wealth Advisory e-newsletter
I'm recommending old favorite Intuitive Surgical (ISRG), a company whose technology has made it the world leader in robotic-assisted minimally invasive surgery.
Right now management has its hands full serving the booming market for its machines—and disposables—as its machines are approved for more surgical uses.
The stock was recommended on February 22 in Cabot Market Letter, in which editor Michael Cintolo wrote, "It used to be that the Intuitive Surgical da Vinci surgical system was approved just for prostate surgery. But over the years, the system's high-resolution 3-D imaging and minimally invasive incisions have proven so popular that the da Vinci is now approved for use in a host of surgical situations. Every system sold keeps generating continuing income through replaceable supplies, which is why 2011 earnings hit $12.32 per share and 2012 is projected to hit $14.49 per share. The stock is trading over 500, but the company's revenue and earnings growth are still strong. This is a large-cap leader. BUY."
Since then the stock is up 15%.
Two weeks ago, I recommended the stock in an article that focused on six stocks breaking out to new highs. Since then it's up another 7%, and I have little doubt it will be higher in the months and years ahead.
So you could just rush in and buy here, but it would probably wiser to take a look at the latest issue of Cabot Market Letter, and to learn about similar high-potential stocks.
Mike will also tell you when to sell!
Editor's Note: Forget the naysayers ... 2012 will be one of the MOST PROFITABLE years on record. In fact, we're so sure you'll bank big gains this year that we're giving away my entire buy list FREE with your paid subscription. Click here to learn how you too can win big in the market this year.
From Cabot Wealth Advisory, 1/30/09 Sign up for free Cabot Wealth Advisory e-newsletter
One of the hardest concepts for individual investors to grasp is the idea that the stock does not represent the company. In fact, the stock represents investors' PERCEPTIONS of the company. If investors think a company's future is bright, even though it is not yet a big success, they'll pay a premium for their expectations--pushing the stock up in the process. Contrarily, if investors perceive that a company is becoming less successful, or simply growing less rapidly, its premium will shrink. In the worst cases, the stock will decline, even though the company is still growing!
For example, Intuitive Surgical (ISRG) is a company that makes million-dollar remote-controlled surgical systems that do minimally invasive surgery better than humans. It was a marvelous growth stock from 2004 to 2007, appearing in Cabot Top Ten Report 17 times. Its first appearance was August 2004 when it was trading at 23, and its last was December 2007 when it was trading at 328. At the peak, its P/E ratio (its premium) was 98! But then the company's growth began to slow...and it's still slowing. The growth rate of revenues in the past five quarters has slowed from 68% to 22%, while the growth rate of earnings has slowed in the past six quarters from 111% to (ready?) just 2%! Looking forward, analysts are projecting that earnings will grow just 2% in 2009.
In short, the perception of the company's growth prospects has diminished dramatically. So the P/E (the premium) has shrunk to just 21. The stock has fallen from 328 to 103. And the trend is still down. How low it will go, no one knows, but I guarantee that when it bottoms it will be selling at a great discount...at which point bargain-hunters hunting for value will appear. But it's not there yet.
President, Chief Investment Strategist, Editor of Cabot Stock of the Month
Timothy Lutts heads one of America’s most respected independent investment advisory services, publishing eight newsletters to more than 165,000 subscribers around the world. Tim leads a dedicated team of professionals who serve individual investors with high-quality investment advice based on time-tested Cabot systems. Under his leadership, Cabot has been honored numerous times by both Timer Digest and the Hulbert Financial Digest as among the top investment newsletters in the industry. Tim also edits Cabot Stock of the Month.
|Intuitive Surgical (ISRG)
1266 Kifer Road
Sunnyvale, California 94086-5304
|Index Membership: Nasdaq 100
Industry: Medical Appliances & Equipment
Full Time Employees: 2,018
1/30/09 Intuitive Surgical (ISRG): When it bottoms, it will sett at a great discount