This Day On The Street
Continue to site
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

Medtronic Is Great but Its Stock Is Too Expensive for Now

NEW YORK (TheStreet) -- Medtronic (MDT - Get Report) isn't the first name investors think of when asked about the global leader in medical technology. Most people think of Johnson & Johnson (JNJ).

But the Minneapolis-based medical device company hasn't let the lack of name recognition stop it from making headlines. Wednesday, Medtronic announced it submitted the final module of its pre-market approval application for its IN.PACT Admiral drug-coated balloon to the U.S. Food and Drug Administration.

This advances Medtronic's plans to introduce the new medical device for the treatment of peripheral artery disease afflicting millions of Americans. It has the potential to be a blockbuster if approved.

In addition, at last week's analysts meeting, Medtronic management emphasized its focus on revenue and earnings growth while remaining open to possible acquisitions if beneficial to the company's shareholders. Does that make Medtronic a possible suitor for British medical device company Smith & Nephew (SNN)?

The mere possibility of a merger pushed MDT to a 52-week high of $64.33 last week. Shares closed Wednesday at $61.17, up nearly 7% for the year to date.

What concerns me is the share price last week rose to a level where the dividend yield fell to a paltry 1.74%. When an investor compares that dividend yield to Johnson & Johnson's 2.72%, the scales tip decidedly against Medtronic.

Don't misunderstand: Medtronic is a great health-care company that has done a stellar job increasing the price of its stock. The following five-year chart demonstrates this graphically.

MDT Chart
data by YCharts

1 of 2

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
MDT $79.50 0.86%
AAPL $93.24 -0.41%
FB $117.81 -0.21%
GOOG $701.43 0.82%
TSLA $211.53 -4.96%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs