Becton, Dickinson (BDX): Jonas Elmerraji's top stock for 2010

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Jan 04, 2010
"Healthcare sector giant Becton, Dickinson and Co. (BDX, Financial) is our top investment pick for the coming year," says Jonas Elmerraji.


In his growth stock-focused advisory, the Rhino Stock Report, he assesses the prospects for the medical equipment firm.


"If anything’s certain for 2010, it’ll be that nothing’s certain as far as stocks are concerned.


"With 2009 coming to a close amid a substantial rally that’s pushed the valuations of major indexes like the S&P 500 and Dow more than 60% higher since mid-March lows, it’s inevitable for investor anxiety to spill over into the New Year.


"But while getting defensive calms fears of a second tumble in stocks, it also precludes your portfolio from gains. That’s why our favorite play for 2010 is Becton, Dickinson and Co.


"The company develops, manufactures, and distributes complex high-margin medical equipment, including oncology and pathological diagnostic devices, but the company’s bread and butter is in basic surgical instruments like needles, syringes, and scalpels.


"That focus on medical necessities have given Becton a fairly soft cushion in spite of economic conditions that have been less kind to medical equipment makers who focus exclusively on high-tech, capital-intensive products.


"In fact, in the trailing four quarters, Becton has seen sales growth at a rate that’s 3x that of the industry, while the S&P’s average sales numbers actually slid backward. Thick margins helped deliver EPS of $4.93 in the year ending September 2009.


"And while scores of other S&P stocks rallied hard in 2009, Becton’s year has been more modest – a 13.5% increase year to date. A look at Becton’s financials suggests that the stock is trading in a reasonable range, particularly when compared against overbought competitors."


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