Church & Dwight
In a world where conventional consumer product stocks are the biggest blue chips on the NYSE, it's no huge surprise that mid-cap name Church & Dwight (CHD) doesn't have the same name recognition among investors that Procter & Gamble (PG) or Clorox (CLX) get. But while C&D's market cap isn't blue chip, its brands are: Arm & Hammer, Oxiclean, Nair and Orajel are some of the best-known names in CHD's portfolio.
Innovation has been big for Church & Dwight. By leveraging legacy names like Arm & Hammer in new products, the firm has managed to fuel growth in one of the oldest consumer brands in the country. Arm & Hammer's ownership of a boring, low-moat business like baking soda is attractive too -- it provides hefty margins and opened the door for the double-digit annualized growth that CHD has turned out in the shadow of the Great Recession.
Church & Dwight is in solid financial shape, with net margins in the double digits and a debt load that's more than manageable. While the firm's dividend payout falls short of the sort of income that gets shelled out at bigger consumer product firms, a handful of high-growth brands more than makes up for it.Varian Medical Systems Palo Alto-based radiation technology firm Varian Medical Systems (VAR) makes devices used for cancer treatment, x-rays, and even nonmedical applications like security products. The firm is the league leader in the oncology market, having established one of the first commercial radiation therapy systems to hit the market. Radiation systems are complex, and as a result making them is capital intense and fraught with challenges -- that gives Varian a measurable advantage over competitors. New advances in Varian's systems provide higher levels of precision in irradiating cancerous cells, a big advantage considering the side effects of radiation on healthy cells. That fact, coupled with Varian's name, should help spur sales of new therapy equipment as medical facilities upgrade or grow their treatment capabilities. An aging population is another big factor for Varian in the coming years -- as the pool of patients in need of Varian's offerings increases, so too should the firm's sales. Varian's expertise in high-precision medical applications makes less exacting devices a no-brainer for the company. Newer markets like x-rays and security take the firm's existing IP and manufacturing expertise and simply apply it to a new use -- that dramatically reduces the development costs that Varian shells out to bring products to market relative to peers. As emerging market healthcare systems modernize their disease-fighting arsenals, Varian should see a big opportunity in boosting its international presence as well. To see all of this week's Rocket Stocks in action, check out the Rocket Stocks portfolio at Stockpickr.
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