Market veteran recommends Medtronic as long-term investment

Two-decade market veteran Bret Jensen believes that it’s important to look for stocks with “solid dividends, low valuations and good growth prospects”– and Medtronic is his latest selection.

Medtronic’s growth rate has been 9.2 percent over the past five years, though it has recently slowed due to fewer medical procedures and a sluggish economy. However, Medtronic is bringing new products to market, improving research and development, and moving into emerging markets, which may help the growth rate increase. Estimates for 2013 are at $3.72 per share, compared to $3.45 for 2012 and $3.37 for this year. Earnings per share have increased from $1.48 per share in 2005 and the dividend has increased from 29 cents a share to 97 cents a share.

Jensen is the chief investment strategist for private investment fund Simplified Asset Management (S.A.M.) and has nearly 20 years of experience in the financial services industry. He serves as the corporate secretary for Florida Alternative Investment Association. Here are seven reasons he believes Medtronic is a great long-term buy at $33, as posted on SeekingAlpha.

1. Medtronic is selling at the very bottom of its five-year valuation range based on P/E, P/S, P/B and P/CF.
2. MDT provides a solid 3 percent yield. More importantly, it has grown its dividend payment by a 20 percent annual clip over the past five years.
3. Medtronic has an AA- rated balance sheet, a low beta (.91) and has increased its earnings by 8 percent on average over the past half-decade despite very challenging economic times.
4. Three insiders recently bought almost $600,000 of shares recently. They also have a new CEO and are going through a new product cycle.
5. Medtronic consistently produces a return on equity just north of 20 percent.
6. In its last quarter, for the first time in two years the company gained market share in pacemakers and stabilized its share in ICDs.
7. MDT is selling under analysts’ price targets. The mean analyst target on Medtronic is $40 and S&P has a price target of $39 on MDT.