Medical equipment stocks may be one of the best "re-opening" stocks out there. The global pandemic delayed many surgical procedures that weren't related to COVID-19. Now that the vaccine rollout is in motion around the U.S., those postponed surgical procedures -- and the devices used in them -- are back in demand.

There are other reasons to be optimistic in medical equipment stocks such as Boston Scientific (NYSE:BSX) and Medtronic (NYSE:MDT). Improvements in medical technology will likely lead to more diagnoses and more procedures. Another tailwind is the aging of our population: The number of Americans over 65 will double over the next 40 years, increasing the need for various medical procedures.

Let's take a look at why an investor might choose to buy Medtronic or Boston Scientific stock, and the advantages each one might hold.

Doctor wearing personal protective equipment and scrubs clicks a button on a monitor.

Image source: Getty Images

The case for Medtronic

Medtronic just came out with its fiscal full-year and fourth-quarter 2021 report last week. Its Q4 revenue was $8.2 billion, up 37% year over year and 110% sequentially. Its net income was $1.361 billion, up 7% sequentially and 37% year over year.

It's obvious that business is picking up. The company operates in four portfolios: cardiovascular; medical surgical; neuroscience; and diabetes. All four portfolios saw modest single-digit increases in revenue for the fiscal year, but for Q4, all of the increases were in the double digits, led by neuroscience, which rose 54% year over year, and cardiovascular, which climbed 45% over the same period in 2020.

In its first-quarter earnings call, Medtronic said that it expects to spend 10% more in fiscal 2022 on research and development (R&D). Medtronic's focus on its R&D budget has already been paying off. The company just earned CE approval in Europe for its InPen smart insulin pen for daily injections and its Guardian 4 sensor, a fingerstick-free calibration for diabetes. The CE mark will allow the company to combine its next-generation sensor with its MiniMed 780G insulin pump system or the InPen, for complete continuous glucose monitoring (CGM). The company said it expects to bring the products to market in Europe this fall. The CE Mark decision makes the devices' ultimate approval in the U.S. look more promising.

Medtronic's strength in insulin care is a big advantage: The global CGM market is expected to have a compound annual growth rate of 15.8% between 2020 and 2026, reaching a value of $12.18 billion by 2026, according to a study by Polaris Market Research. Medtronic, along with Abbott Laboratories and DexCom, are the main makers of CGM devices in the U.S. That study was done before the Centers for Medicare & Medicaid Services in October updated its policy to pay for Medicare patients to use CGMs, making expensive systems -- which can cost $6,000 or more per year -- more affordable for the general population.

The company's stock is up more than 28% over the past 12 months and more than 6% this year. Medtronic has issued guidance of 9% growth in revenue in 2022, giving the company a relatively low forward price-to-earnings ratio of 22.

One advantage Medtronic has over Boston Scientific is its status as a Dividend Aristocrat. The company has raised its dividend for 44 consecutive years, including a 9% raise this year to $0.63 per share, which works out to a yield of about 2%. The company's stock also appears to be priced slightly better than Boston Scientific, which has a forward price-to-earnings ratio of around 26.

The case for Boston Scientific

Boston Scientific also saw gains in its most recent report, for the first quarter of 2021. The company reported net revenue of $2.752 billion, up 8.2% year over year, while its net income of $327 million represented an increase of 287% year over year.

Like Medtronic, one of the biggest gains was in its cardiovascular segment, which saw an increase of 10% in the quarter, year over year, followed by its medical surgery segment, which was up 11.1% year over year.

Boston Scientific's smaller size (compared to Medtronic) works in its favor for investors, as the company has outpaced Medtronic's growth over the past five years, with greater revenue and net income gains over that period.

MDT Total Return Level Chart

MDT Total Return Level data by YCharts

Boston Scientific doesn't pay a dividend. However, if you compare total returns over the past five years, Boston Scientific still has the edge.

Despite its smaller size, Boston Scientific outpaced Medtronic in terms of innovation last year, with five new U.S. Food and Drug Administration (FDA)-approved medical equipment devices to Medtronic's three. Boston Scientific also just announced it is starting the first clinical trial in the U.S. to evaluate the safety and effectiveness of a drug-coated balloon for patients with coronary in-stent restenosis. The device is supposed to open narrow vessels and transfer the drug to the vessel wall. The company also reported positive results from multiple studies for its Acurate neo2 Aortic Valve System that showed the system was associated with less aortic regurgitation compared to earlier versions of the device.

The choice isn't an easy one

These are both solid healthcare stocks worth investing in, with medical trends buoying their bottom lines. Boston Scientific shows a greater rate of growth over the past five years, but Medtronic's latest quarterly results show more recent momentum. Medtronic's solid dividend makes it a little less risky.

Boston Scientific has showed more recent innovations, though I think Medtronic's focus on CGMs reaches a greater share of the market and is more profitable. Considering all these factors and the fact that it has a lower forward price-to-earnings ratio, Medtronic appears to be the better stock -- for the time being. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.