Simply put, medical devices are one of the hottest job subsectors of the massive healthcare industry. While the labor market overall has been a very questionable affair, certain areas have seen a significant rise in both employment opportunities and wages.
In fact, areas within Minneapolis and Dallas are experiencing a worker shortage, particularly in technical sectors like medical devices. The shortage has culminated in companies luring high-skilled workers with exceptionally generous offers — a practice that will likely continue for the foreseeable future.
The surge in medical devices is a welcome sign for U.S. Federal Reserve chairwoman Janet Yellen. While undoubtedly pleased with the national unemployment rate dropping under 5%, Yellen is disappointed with overall tepid wage growth.
The present situation makes it all the more likely that the Fed will adopt a dovish monetary policy, at least until the broader labor market starts to catch up with medical devices and similarly rising sectors.
Medical devices are also on a significant uptrend in the financial markets. The benchmark exchange-traded fund iShares Dow Jones US Medical Devices (IHI) is up more than 1% year-to-date after suffering from this January’s steep correction.
However, after hitting bottom in early February, the medical devices ETF has jumped more than 15% in the markets. Over the past few days, we have seen significant moves up, backed by supportive fundamentals as well as trading enthusiasm for the sector.
Of course, ETFs are considered among the safest ways to invest in medical devices, as they feature a basket of healthcare companies. But for a more focalized opportunity, consider these three medical devices stocks that could rule in 2016 and beyond!
Medical Devices Stocks to Buy: Boston Scientific Corporation (BSX)
Medical devices manufacturer Boston Scientific Corporation (BSX) has a remarkable time in the markets since the Great Recession. Over the past five years, BSX stock is up 173% — a figure that is very respectable even among some of the crazy returns seen in the medical devices sector.
What really distinguishes BSX, however, is that they have produced solid results in the face of major troubles. Current chief executive officer Michael Mahoney has led BSX through strategy shifts, reductions in headcount and making critical investments to growth their core heart-related medical devices business.
Given their penchant for rising above any challenge, I wouldn’t stress too much regarding the latest Food and Drug Administration probe into BSX. Specifically, the FDA is investigating a surgical mesh used in gynecological procedures that could “contain counterfeit raw material,” according to Bloomberg.
But by the FDA’s own admission, there is no evidence that this counterfeit material — if it is indeed used by BSX medical devices — is harmful. In fact, the FDA is not recommending removal of the device in question, reiterating the point that potential harm is theoretical.
What isn’t theoretical is the bullishness for BSX in the markets. Boston Scientific shares moved up 1% on the day of the FDA announcement, followed by a robust 3% move on Monday.
BSX has recovered very well from the broad January correction, with shares up 4% year-to-date. Over the past month, BSX has gained 11%. Much of the enthusiasm can be traced to positive corporate guidance. The company intends to launch new defibrillators and stents for the international medical devices market. Wall Street analysts are hopeful that this will improve the investment picture broadly for BSX.
As Boston Scientific has proven over the years, it’s more than capable of meeting expectations.
Medical Devices Stocks to Buy: Edwards Lifesciences Corp (EW)
Stop whatever it is that you’re doing and take a look at Edwards Lifesciences Corp (EW). EW stock is lighting up the markets like its deliberately compounded name lights up a spell check app.
While a majority of blue-chip stocks are showing pensiveness after reaching highs for the year, EW skyrocketed against the grain with a 17% pop Monday. Medical research indicated that Edwards Lifesciences’ heart-valve procedure was not only less invasive, but also just as effective as traditional open-heart surgery.
EW stock has already been on a nice uptrend since the start of the year, so the recent gap up only confirms the broad bullishness towards the company. Nevertheless, the Sapien-3 heart valve produced by EW could be considered a revolutionary innovation among medical devices.
Not only is open-heart surgery a risky proposition, an estimated three-quarters of a million Americans engage in medical tourism annually to substantially slash costs. The implications of the EW technology moving forward is safer care requiring less intensive — and therefore cheaper — procedures.
That alone is reason enough for many investors to consider EW stock. But the good news gets better when you look at the fundamentals for Edwards Lifesciences. With operating and net margins well into the double-digits, EW handily beats a majority of medical devices stocks. Revenue has been steadily increasing over the past few years, and this is a trend that in all likelihood continues to grow.
There is also a lot of stability in the balance sheet, with total assets vastly outpacing liabilities.
EW stock isn’t what you would exactly call undervalued on paper. It does, however, offer a stable platform and the potential to do so much more.
Medical Devices Stocks to Buy: Second Sight Medical Products Inc (EYES)
It’s time to talk speculation.
To be fair, there are plenty of names among medical devices stocks that are hit-or-miss affairs. But in the case of Second Sight Medical Products Inc (EYES), there’s a rational to the madness.
Sure, anyone with EYES can see the gut-wrenching 75% loss it absorbed in the markets since its initial public offering in late 2014. Things haven’t exactly gone well in 2016, either. However, after bottoming in mid-January, EYES stock has moved up 36.5%, suggesting a brighter outcome for the rest of the year.
For one thing, EYES is at the forefront of one of the most exciting developments within medical devices — retinal implants. Essentially, this is the stuff of science fiction movies. The Argus II device developed by EYES is a multi-tier system utilizing special image-capturing glasses that transmits a signal to a retinal implant. That signal bypasses a patient’s damaged photoreceptors and activates any remaining retinal cells, ultimately creating light patterns that the patient can perceive.
The technology is still being worked out, and the claims made by Second Sight are not yet officially recognized by health officials — hence, the volatile nature of EYES stock.
Although somewhat anecdotal, it should be noted that the recently passed Alfred Mann — a pioneer of innovative medical devices — was a major backer and stakeholder of EYES stock. In fact, his efforts into giving sight for the blind represented his final journey on earth.
Although it is yet unproven, an investment into EYES stock is an investment into the future — one that very well could exceed all expectations.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
