Medtronic -- Benefiting From Emerging Market Growth, Aging Population

NEW YORK (TheStreet) -- Investors who have poured their faith into health care stocks have made tons of money as evidenced by the 26.5% returns delivered by the health care sector over the past 12 months. That's tops in the market with the tech sector coming in second with better than 18% 12-month gains.

One of the beneficiaries of the strong health care movement has been Medtronic (MDT), a Minneapolis-based medical device manufacturer, which is due to report fiscal fourth-quarter and full-year earnings Tuesday before the opening bell. Medtronic's focus on market share expansion in such areas as China, combined with an aging population in need of its services, MDT stock is a place investors can profit in the years ahead.

Granted, MDT shares aren't in the value bin today -- not at 24 times earnings, compared with a P/E of 21 for the S&P 500. And it looks even less appealing with shares trading at near record highs, up almost 7% on the year to date. But that won't matter in the next five to 10 years. Investors can still do well buying MDT stock.

Consider, even at its current level of around $76, Medtronic has done enough to warrant a consensus analyst buy rating and an average 12-month price target of $87, suggesting 13% gains from current levels.

From my vantage point, even if the shares were to reach $87 today, MDT stock would still look undervalued, especially when factoring in its acquisition of Covidien, which now grants Medtronic to new markets like weight-loss surgery, for instance. Medtronic immediately became better diversified with new growth businesses to complement its strength in such areas as insulin pumps and spinal implants.

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