Pat McKeough responds to many personal questions on investing in stocks and other investment topics from the members of his Inner Circle. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for the Inner Circle.
Recently, an Inner Circle member asked about a company that has created a strong niche for itself in dental products. The company is growing internationally, and Pat assesses whether increased strength in Asia can offset slower growth in Europe.
Q: Pat: Could you share your thoughts on Dentsply International? Thanks for your help.
A: Dentsply International (symbol XRAY on Nasdaq; www.dentsply.com) develops, makes and markets products for the dental industry.
The company’s consumable and laboratory products include artificial teeth, root-canal instruments, impression materials, dental sealants and anesthetics. Dentsply also develops and makes dental equipment, including X-ray systems, cameras, computer-imaging devices and related software.
In June 2011, Dentsply bought Astra Tech AB from AstraZeneca for $1.8 billion. This Sweden-based company is a leading provider of dental implant products. It also makes consumable medical devices for the urology and surgery markets such as catheters.
You can keep on building wealth in good markets and bad when you follow safety-conscious strategies that have proved themselves in all market conditions. That’s what you get with Canadian Wealth Advisor, Pat McKeough’s newsletter for conservative investors who want to earn more with less risk. Canadian Wealth Advisor consistently recommends safe-money investments—conservative dividend stocks, ETFs and Canada’s best REITs—that prove you don’t have to take outsized risks to get outsized returns.
Dentsply to plug new products into worldwide distribution network
In the three months ended June 30, 2012, Dentsply’s revenue rose 23.8%, to a record $698.5 million from $609.4 million a year earlier. Sales benefited from acquisitions and growth in all of the company’s markets. Earnings per share before one-time items rose 10.7%, to $0.62 from $0.56.
The company holds cash of $53.2 million, or $0.38 a share. Its long-term debt of $1.5 billion is a reasonable 28.3% of its market cap.
The stock trades at a reasonable 16.7 times the $2.23 a share that Dentsply is forecast to earn this year. The Astra Tech acquisition has given it a number of new, fast-growing, highly profitable products to sell through its worldwide distribution network.
In the most recent Inner Circle Q&A, Pat looks at whether gains for Dentsply in Asia can offset a drop-off in elective dental surgery in Europe, a major market for the company. He concludes with his clear buy-hold-sell advice on this stock.
COMMENTS PLEASE—Share your investment experience and opinions with fellow TSINetwork.ca members
Are you attracted to companies that have a niche market, like dental products? What indicators or measurements do you look at before you buy stocks like these? How successful have they been for you? Let us know what you think.
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