Why Vascular Solutions Is Poised to Outperform

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, medical device maker Vascular Solutions (NASDAQ: VASC  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Vascular and see what CAPS investors are saying about the stock right now.

Vascular facts

Headquarters (founded)

Minneapolis, Minn. (1996)

Market Cap

$273.3 million

Industry

Health care supplies

Trailing-12-Month Revenue

$102.6 million

Management

Co-Founder/CEO Howard Root
CFO James Hennen

Return on Equity (average, past 3 years)

21.5%

Cash / Debt

$19.7 million / $0

Competitors

Abbott Labs
Medtronic
Johnson & Johnson

Sources: S&P Capital IQ and Motley Fool CAPS.

Just yesterday, CAPS member rknapton succinctly summed up the Vascular outperform case for our community: "Long. Medical instruments company. Nice steady growth. Buying back stock. Cash flow from operating activities growing. Earnings grew 17% on a 9% boost in revenues last quarter. Not bad here at 21x fwd estimates."

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong five-star rating, Vascular may not be your top choice.

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Comments from our Foolish Readers

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  • Report this Comment On September 13, 2013, at 4:35 PM, MedtechInsider wrote:

    VSI may outperform in the short run, but (in my opinion) it will tank in the long run for the following reasons:

    A large amount of its profits are from two devices, and the rest are from a multitude of small devices that do about $1 million in sales annually. This is bad for two reasons. The first is that those two devices could fail (in production, competition, ect) and then you're out a significant portion of the profits. The second is that VSI is wasting time and resources on these small products. VSI already outsources a significant portion of its manufacturing, and that cuts into the margins and outsourcing has cost the company with major recalls.

    One of its flagship products, which accounts for VSI's rapid growth, now has a competing device made by BSX. Yes, VSI is suing BSX for patent infringement, but I foresee VSI losing this battle big time. VSI will then loose control of that segment, and from there the decent will be rapid.

    While VSI does have some talented people, it has more blind leading the blind than it should, and its engineering staff is lacking in some very key areas. I've seen this first hand, and this should be a major concern.

    For these reasons the stock is over valued, the company is overestimated in ability, and the investment base is being led down a bad path by CEO Howard Root. Only bad things can happen, and you should sell while you still can (in my opinion).

  • Report this Comment On April 17, 2014, at 5:20 PM, chris293 wrote:

    VASC is Vascular Solutions Inc. (VSI) one and the same running with the big dogs of medicine and doing a pretty good job of it or so I think. But thanks to the prior comment I will look again. Maybe I'll buy or maybe I'll sell. The over 20% ROE with no debt and the coverage by the S&P will help me balance out my decision.

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