Stryker (SYK 0.57%) and Masimo (MASI -0.69%) aren't household names, but their lack of familiarity with the general public belies the steady revenue growth of these two medtech stocks. As the tech sector in general has fallen out of favor this year, both stocks are down.

However, long-term trends make healthcare stocks, especially medical technology stocks, relatively recession-resistant. With labor shortages in healthcare, medical technology is becoming more important than ever for patient management. The need for more healthcare is growing in general, thanks to an aging population.

Those needs present a good opportunity for long-term investors. Both of these medical technology companies have shown the willingness to take risks to enlarge their business this year and were punished for taking those risks. However, both should benefit from a continued rebound in elective surgeries as the pandemic ebbs.

1. Stryker is an underappreciated stock

Stryker's stock is down more than 18% this year. The company operates in two segments. The first is MedSurg and Neurotechnology, and the second is Orthopaedics and Spine. The company makes a variety of medical technology products, including surgical navigation systems, endoscopic and communications systems, as well as more typical medical equipment sales of implants for joint replacements and surgical equipment.

The company's business had been slowed by the pandemic, but it is bouncing back, though supply chain issues, especially regarding electric components, and inflation have cut into the company's profits. The company's biggest move this year was its $3 billion acquisition in February of Vocera Communications, which focuses on digital care coordination and communication, a move that fits in with Stryker's goal of adding digital healthcare offerings.

Stryker just reported third-quarter earnings on Oct. 31. The company said revenue was up 7.7%, year over year, to $4.5 billion, while net income was reported as $816 million, up 86.3% over the same period last year, and earnings per share (EPS) was reported as $2.14, up 87.7% over the third quarter of 2021.

The company raised its dividend by 10.3% to $0.695 per quarterly share, effective this year, the 22nd consecutive year it has raised its dividend. The yield on its dividend is roughly 1.28%, a little below the S&P 500 average of 1.82%.

Over the past 10 years, Stryker has increased quarterly revenue by 307.9% and EPS by 142.3%, but its stock price has only risen by 92.2% in that same period. Trading at a valuation of only 23 times forward earnings, it represents a bargain, especially considering that its current market headwinds are likely to subside.

SYK Chart.

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2. Masimo is a sound investment

Masimo produces medical monitoring technologies, including patient sensors, monitors, and instruments. The company's stock is down more than 55% so far this year, primarily because of the company's $1.03 billion purchase of Sound United, a maker of consumer technology and high-tech audio equipment, which took place in April.

The Medtech company's move to purchase a maker of non-health consumer products puzzled investors. However, if you look at the company's release in August of the Masimo W1 health watch, it makes sense. The company also has a wearable continuous thermometer and a wearable sleep monitor designed for consumers. Basically, the company is looking to take the technology it uses to monitor patients and deliver it to health-conscious consumers in wearable devices. While there are already companies that do this, such as Garmin and Apple, few have the medical technology background that Masimo does.

The other reason the stock has fallen is the company downgraded annual guidance in the second quarter for revenue, operating profit, gross margin, and operating margin.

However, if you dig deeper into the company's numbers, there are plenty of reasons for long-term optimism. In the second quarter, the company reported revenue of $565.3 million, up 85.3%, year over year, with net income of $18.1 million, or $0.33 in earnings per share, down 63.9% and 62.5%, respectively, thanks to the expense of the purchase of Sound United.

Over the past 10 years, the company increased quarterly revenue by $327.7% and quarterly EPS by 26.92%.

The company has also rewarded shareholders with regular stock buybacks. It spent $401 million on a stock repurchase in the quarter and committed to repurchase an additional 5 million shares over the next five years.