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No. of Recommendations: 3
Medtronic (MDT) - MUE Canidate?

Hey Jim,

I like the idea of your port. It is simple and intuitive to me.
A quick idea that I was perusing the other day and figured it may fit your port...

Medtronic - Most know what they do. This is from Google Finance

Medtronic, Inc. (Medtronic) is a medical technology company. The Company is engaged in research, design, manufacture and sale of products to alleviate pain, restore health and extend life. It manufactures and sells device-based medical therapies. It operates in seven segments: Cardiac Rhythm Disease Management, Spinal, CardioVascular, Neuromodulation, Diabetes, Surgical Technologies and Physio-Control. Its primary customers include hospitals, clinics, third party healthcare providers, distributors and other institutions, including governmental healthcare programs and group purchasing organizations. In April 2010, the Company completed the acquisition of Invatec, S.p.A., a developer of medical technologies for the interventional treatment of cardiovascular disease. In November 2010, the Company acquired Osteotech.

Anyway…onto some dirty and quick valuation…
Discount: 11%
FCF: 3,837,000,000
Earnings Growth for next 5 years: 1%
Assumed Growth for years 6-10: 0%
Current Stock Price: $33.90
Shares Outstanding: 1,079,890,000

This all yields an inferred intrinsic value of $33.65/share which is very close to the current $33.90.

A look at previous Earnings although lumpy have grown on average at 16% which I don’t think we will get back to anytime in the future, but I think definitely something above 0% is called for especially with the tailwinds of medical reform and what not…Lastly the company is trading at a depressed P/E compared to historical standards. If a reversion to the mean would happen we are talking about 50% upside. Lastly, you get a 2.6% dividend as you wait to see if the market notices this sleeper.

Anyway, I haven’t looked at this too much and this is only intended to be a starting point. As always do you own DD…

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