Mindray Muddles Through Investors' Attitude

Sometimes I just don't understand investors.

Mindray Medical (NYSE: MR  ) nearly doubled revenue year over year in the third quarter, yet investors sent shares down 16%.

Granted, a lot of that growth was due to the acquisition of U.S.-based Datascope, but growth at home in China was up 45% even excluding the positive effects of currency changes. China isn't dead yet.

The company did reduce its revenue guidance for the year, but that was mostly due to changes in expected currency exchange rates. It's not like the company has much control over the changes and it's still sticking with its EPS guidance, so I'm not sure what's got investors throwing a temper tantrum.

Mindray is in a pretty recession-proof industry and, while U.S. hospitals might be cutting back on spending, that could actually be a benefit for Mindray. Because of its cheap manufacturing capabilities in China, it should be able to offer comparable products for less and that might help it gain some traction against established companies -- like fellow Rule Breakers pick SonoSite (Nasdaq: SONO  ) -- for recently launched products like its new color ultrasound machine.

In China, Mindray is in an even better position, because the government is promoting health care as part of its stimulus package. That'll benefit companies like Mindray and 3SBio (Nasdaq: SSRX  ) even before the economy picks back up.

Growth in China may have slowed down some, but companies that sell products there shouldn't be cast aside. You wouldn't know it looking at the year-to-date returns of China-based stocks like PetroChina (NYSE: PTR  ) and China Life Insurance (NYSE: LFC  ) , but China will be back as soon as investors get their wits.