Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Tuesday's ETF to Watch: Medical Devices Fund (IHI)

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

For the past two weeks, global economic trends have been weighing on equities, with an Irish debt crisis, the possible raising of Chinese interest rates, and now a corruption scandal in India, markets have tried hard to keep their heads above water, but all to no avail. Most trading days have finished in the red as of late, helping to break already low levels of investor confidence. With international markets erupting with negative news and data, it can be easy to overlook events on the home front. Though earnings season for the third quarter of the year is over, there are still a few big name firms who have yet to report their most recent quarter's performance [see also Corruption Scandal Sinks India ETFs].

Today, before market open, medical technology manufacturer, Medtronic (NYSE: MDT  ) , will release their earnings figures. Medtronic is the largest medical technology company in the world, making everything from basic insulin pumps, to complex heart valve replacements. The company is made up of six business units that focus on developing devices to treat major diseases such as heart failure, chronic pain, Parkinson's, and diabetes [see also Inflation-Fighting ETFs Back in Focus].

Analysts predict the company to bring in an EPS of $0.81 with revenues nearing the $4 billion mark. The firm has hit their revenue predictions for the past year, but their EPS came up short last quarter, disappointing investors. However, the company remains an interesting play in the medical field for two reasons. First, Medtronic finds itself in a relatively inelastic line of business, as many people put their lives in the hands of the devices the company produces, and cannot get by without them. However, unlike many of the big pharma firms, Medtronic isn’t facing a patent cliff which threatens to destroy its profitability for years to come. Recent political events could also benefit the company, as a gridlocked central government will likely be unable to enact further health care legislation -- such as the controversial Affordable Care Act which was signed earlier this year -- which gives the company a potentially brighter future [see also MLP Exposure: ETF or ETN?].

With this earnings report set for today, the iShares Dow Jones U.S. Medical Devices Index Fund (NYSE: IHI  ) should be active in trading. Measuring the performance of the U.S. medical equipment sector, this fund's top holdings feature the in-focus Medtronic (9.7%), Covidien (NYSE: COV  ) (7.3%), and Thermo Fisher Scientific (NYSE: TMO  ) (7%). Though recent weeks have been relatively unkind to the ETF -- it is down 1.9% over the past two weeks -- IHI is still up 3.8% on the year. If Medtronic's numbers come in solid, this ETF should have a strong day, but if the company falls short or lowers its guidance, IHI could be in for a rough trading session.

[For more ETFs to watch make sure to sign up for our free ETF newsletter.]

More from

Disclosure: No positions at time of writing.

ETF Database is not an investment advisor, and any content published by ETF Database does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. From time to time, issuers of exchange-traded products mentioned herein may place paid advertisements with ETF Database. All content on ETF Database is produced independently of any advertising relationships. Read the full disclaimer here.

Covidien and Thermo Fisher Scientific are Motley Fool Inside Value picks. The Fool owns shares of Medtronic. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1378276, ~/Articles/ArticleHandler.aspx, 10/22/2016 11:26:20 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
COV.DL $0.00 Down +0.00 +0.00%
Covidien CAPS Rating: *****
IHI $141.45 Down -0.83 -0.58%
iShares Dow Jones… CAPS Rating: ***
MDT $83.91 Down -0.11 -0.13%
Medtronic CAPS Rating: *****
TMO $150.66 Down -1.00 -0.66%
Thermo Fisher Scie… CAPS Rating: ****