Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, medical lab operator Quest Diagnostics (NYSE: DGX ) has earned a respected four-star ranking.
With that in mind, let's take a closer look at Quest's business and see what CAPS investors are saying about the stock right now.
Quest facts
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Headquarters (Founded)
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Madison, N.J. (1967)
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Market Cap
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$8.4 billion
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Industry
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Health care services
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Trailing-12-Month Revenue
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$7.43 billion
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Management
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CEO Dr. Surya Mohapatra (since 2004)
CFO Robert Hagemann (since 1998)
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Return on Equity (Average, Past 3 Years)
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18.4%
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Cash/Debt
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$447.9 million / $3.14 billion
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Competitors
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LabCorp (NYSE: LH )
Bio-Reference Laboratories (Nasdaq: BRLI )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 95% of the 555 members who have rated Quest believe the stock will outperform the S&P 500 going forward. These bulls include All-Star MagicDiligence, who is ranked in the top 10% of our community, and tekennedy.
A few months ago, MagicDiligence touched on Quest's attractive position:
The largest independent diagnostic medical testing firm in the U.S., with over 2,000 locations. Duopoly with Lab Corp. Demographics is the story here -- as the U.S. population ages and doctors push preventative care, increased clinical testing demand should follow. Quest has solid competitive positioning and fair growth prospects.
While the "big two" of Quest and LabCorp are certainly the most obvious lab testing bets, our community seems to be finding value in the entire sector. Smaller, more specialized testers Genoptix (Nasdaq: GXDX ) and Myriad Genetics (Nasdaq: MYGN ) also carry four-star CAPS ratings, while Genzyme (Nasdaq: GENZ ) , which recently agreed to sell its lab testing business to LabCorp, doesn't sport a single All-Star underperform call. Of course, with the way Quest, LabCorp, and to a lesser extent, Bio-Reference, are currently dominating the business, several labs are simply choosing to sell out, creating plenty of takeover speculation in the space.
CAPS member tekennedy expands on how Quest, in particular, is nicely positioned to pounce:
Strong ROE with ability to grow. I like this company due to its strong competitive position, effectively sharing the market with [LabCorp], backed up by strong scale benefits. The company should also experience strong growth due to the oh-so-talked-about baby boomer aging and potential overall medical savings from increased screening. There is the potential of exponential growth in screening with genome based tests, which could help prevent or decrease the negative impact of a large number of major conditions. ... At its current pricing I believe this company should be able to outpace the S&P in the vast majority of situations.
What do you think about Quest, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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