Trade of the Day: My Favorite Medical Device Stock is About to Go on Sale

Advertisement

Medtronic, Inc. (MDT) — This global medical device maker is a leader in pacemakers, defibrillators, orthopedic devices and diabetes management products.

In June, the company announced that it would acquire Ireland-based Covidien plc (COV) for $42.9 billion and move its headquarters overseas in a deal that is set to be closed late this year or early next year. The U.S. government initially balked at the tax inversion structure of the deal. But the new Republican-controlled Congress may be more willing to cut corporate taxes and thus bring tax revenues back to this country.

Additionally, the Republicans may revoke the Affordable Care Act’s medical device tax, which has been unpopular with companies in the sector.

S&P Capital IQ estimates operating earnings of $4.10 per share for fiscal 2015 (ended in April), up from $3.02 in 2013.

MDT stock is in a powerful bull channel that began in June 2012 at about $40. Since then, it has tracked its 50-day moving average and found support at its 200-day during periods of profit taking.

The stock rallied on news of possible tax relief and is now at the top of its 10-point trading range. MACD is overbought, and although recently there has been more upside than downside volume, volume is declining. Therefore, chances of profit taking are high.

MDT is my favorite stock in the medical equipment group. Try to buy shares under $65 for a trade to $72. Investors should consider MDT stock as a long-term purchase and cornerstone holding in this profitable sector.

MDT Stock Chart
Click to Enlarge

Chart Key


Article printed from InvestorPlace Media, https://investorplace.com/2014/11/trade-day-medtronic-inc-mdt-stock/.

©2024 InvestorPlace Media, LLC