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Subject:  My 5 Finalists -- #4 Medtronic Date:  6/13/1998  1:47 AM
Author:  MrShihTzu Number:  213 of 8329

Medtronic -- According to my calculations from the most recent 10Q (which means I haven't adjusted out a couple of recent charges that lower the numbers), they pass all the numerical CK criteria, other than the flow ratio.

Gross Margin -- 74.5%
Net Margin -- 15.5%
Leveraged Flow -- 1.97
Unleveraged Flow -- 2.34
Cash/Debt -- 20

As with nearly all medical companies, they do fall short on consumer mindshare as consumers generally do not buy their products. But, they seem to have great mindshare among their core customers. They have a dominant share of the market for pacemakers and some other medical devices as well. I think our portfolio needs another medical stock, and I think that this one, which is lesser known than the pharmaceuticals is a worthy candidate.

The stock's performance over the years certainly speaks for itself.

Personally, I like the direction as well. EPS has grown by nearly 25% over the last 5 years and is expected to grow just under 19% over the next 5.

The rather high "flowie" and the rather slow turnover of receivables are both strikes against this one.

Phil


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