If you're aiming to "buy low and sell high," then it makes infinite sense to start your search with bargain-priced stocks. Regularly reviewing a list of stocks trading near their 52-week lows can be a great first step.
Here, I'll try to do the initial legwork for you. To prevent us from being inundated with scores of disparate companies, I'll conduct my search by industry. This will allow us to make some initial comparisons among semirelated companies.
There are 24 industry groups as defined by the Global Industry Classification Standard (GICS). Health-care equipment and services is one of them. Here are the largest by market cap that are hugging 52-week lows.
|
Company |
Market Capitalization |
Change From 52-Week Low |
P/E Ratio (Trailing) |
|---|---|---|---|
|
Medtronic |
$36,716 |
10.4% |
10.5 |
|
Covidien |
$20,333 |
15.4% |
16.3 |
|
Stryker |
$20,049 |
18.2% |
16.7 |
|
Becton, Dickinson and Company |
$17,834 |
16.0% |
15.1 |
|
McKesson |
$16,369 |
12.2% |
13.4 |
|
Cardinal Health |
$11,612 |
18.0% |
20.5 |
Source: Capital IQ, a division of Standard & Poor's. Data as of Oct. 18, 2010.
Medtronic's P/E ratio is the lowest of the group. Not surprisingly, it's also the closest to its 52-week low. This large medical-device maker is worth looking further into.
Cardinal Health, meanwhile, has the highest P/E ratio. But digging further, its recent cash flows have dwarfed its net income. The result? A trailing price-to-free cash flow ratio in the single digits.
Another way to look at these stocks is through the prism of consistent dividends. My colleague Jim Royal compiled a list of the top stable dividend payers in the sector here. Of the companies listed above, Medtronic, Cardinal Health, Becton Dickinson, and Stryker made the list.
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