Roadrunner Stocks is a newsletter run by Jim Fink at Investing Daily, and I think I’ve only covered his teaser pitches once before — that was back in October, and the four stocks he touted at the time are more or less a wash over that time period, half better performers than the market and half worse. This latest pitch from him is a bit more interesting, though, because it’s a fairly well-reasoned argument for a single stock … and it’s in a sector that I agree is worth checking out.
Whether or not that means his idea works out is an open question, of course, but the great Gumshoe faithful want answers … so let’s go get ’em.
The idea he’s touting he calls “Operation 10X” — an opportunity to make ten times your money, the fabled Peter Lynch “10-bagger” that every investor lusts after. And it’s an orthopedics company.
And, of course, as with all good medical device stocks it gets held up to the mirror to see if it might bear a passing resemblance to Intuitive Surgical, the skyrocketing maker of the minimally invasive da Vinci surgical system (and yes, every time I see this I get a little grumpy — I sold my ISRG shares back in 2008, after a nice run but still more than $200 ago… I guess it’s some consolation that I haven’t had to sit through their rollercoaster run of $500-300-$500-$300 over the last year). Here’s what Fink says:
“Individual investors who recognized Intuitive Surgical and rode the powerful mega-trend for a few years got rich. And I mean really, really rich!
“Am I suggesting you buy Intuitive Surgical stock now? No. Absolutely not. That opportunity is over. It’s done.
“You may have missed Intuitive Surgical rocketing 2,624% higher. (Don’t feel bad, so did I!)
“But you are NOT going to miss this next one!
“And how do I know this?
“Because I’m going to make darn sure you recognize the next mega-trend on Wall Street that’s happening right now!”
I’m not so sure ISRG is “done”, though as a $14 billion company it’s already grown into its business quite a bit — it is, at least, more reasonably valued now than it has been in a long time, and I think many investors probably understate the value of having a ten-year head start on other robotic surgery systems and a large base of trained doctors who use your tools… but we’re not talking about ISRG today. What is the company they’re teasing for Roadrunner Stocks? Here are some more clues:
“My next 10-bagger was born when an orthopedic surgeon at the Mayo Clinic had a vision. The doctor had worked with several orthopedic companies and thought he saw some things the industry could do differently, and better.
“This surgeon believed in the Mayo Clinic mission that the needs of the patient come first. He wanted to make a difference in the quality of care provided to his patients suffering pain and loss of mobility from joint diseases.
“After leaving the Mayo Clinic, the surgeon started his own orthopedic company and then took it public. He is determined to provide innovative joint-replacement products designed by surgeons for their patients.
“The firm is now one of the world’s fastest-growing orthopedic companies. Sales exploded and they carved out a significant share of the $40 billion orthopedic implant market….
“My top-secret recommendation develops, manufactures and sells orthopedic implant devices, related surgical instrumentation and biologic services to hospitals around the world.”
The orthopedic market is pretty concentrated at the top, at least in the big areas like hip and knee replacements, with Johnson and Johnson (JNJ), Stryker (SYK) and Zimmer Holdings (ZMH) sharing dominance in most areas, but there are a surprisingly large number of smaller players who bring innovation and niche expertise… I guess there will always be entrepreneurial surgeons who think they can make a better shoulder socket, and many of the startup companies end up being bought out by the large firms or merging with each other, just like in pharmaceutical development.
So this isn’t a tease for one of those biggies — they are all pretty solid companies, and Zimmer is actually looking pretty interesting again (I suggested that one bac