This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Katz: Two Names Continue to Impress

The other area of disappointment was modest market share lose in the U.S. for knee and hip products (the company's market share was stable internationally). While I never like to see short-term share slippage, I am very confident in the company's product lines and believe that, over time, it will be able to maintain market share, which is at a very healthy 20% to 25% range.

Earlier this year the company initiated its first dividend, which stands at 1.2%. I expect the dividend to show nice growth. The company has an "A+" investment-grade credit rating with a balance sheet that is close to net debt free. For the past decade, Zimmer has consistently grown revenues by 14% per year and earnings by 15% per year. Although Zimmer's growth rate has slowed in recent years due to the macro industry headwinds of reduced procedure growth and downward pressure on prices, I expect Zimmer to report 3% to 5% revenue growth per year and 8% to 10% earnings growth due to continued modest industry growth, further emerging market penetration and aggressive share repurchase programs.

As discussed in April, shareholders might get lucky with a takeover of the company, as it has very attractive attributes that should appeal to a larger healthcare player.

Take advantage of the recent stock decline, which was driven by the modest revenue miss, concerns over share loss in the U.S. knee and hip markets and a conservative top-line outlook. ZMH's market valuation is very attractive relative to the company's current and long-term earnings power and cash flow.
At the time of publication, Katz was long PEP and ZMH.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free

Markets

Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs