Priced at $37.10 as of 5/3/02

Certainly my mom gets the joke. I, the world's worst sissy when it comes to any type of needle piercing my skin, would tell her how much I admire the world's largest manufacturer of the confounded things.

Becton, Dickinson (NYSE: BDX) , you taunt me. There may be no company on earth whose products I like less than yours, and yet I am so utterly impressed by your business that I would speak glowingly about you to my mother. This is the same woman who had to put up with me every time another activity involving interaction between a hypodermic needle and my flesh was imminent. I doubt she has memories that are much fonder than mine about my history with shots.

And yet, I deeply admire this company, its products, and the dominant position it has over its market. Annually, Becton, Dickinson produces more than 12 billion needle-bearing medical devices. That's a huge number of units that sell at a very low cost. The thing about these 12 billion units is that not a single one of them has a defect. In other words, Becton, Dickinson has spent millions developing facilities and processes to ensure a product failure rate of, well, zero.

That's something special. Think about that. A drive-through fast-food restaurant is doing pretty good if it manages to get the correct order for three consecutive cars. What are the chances that they'd let 12 billion cars go by without making a mistake? How much money would it cost to ensure that they never, ever replace your Big Kahuna Burger with a Fish Mambo Sammich?

And Becton, Dickinson does all this profitably. Not just a little bit profitably, but really profitably. In 2000 Becton, Dickinson produced nearly $800 million in operating cash flow on sales of $3.7 billion. And while hypodermic needles may seem like a fairly slow-growth industry, Becton, Dickinson's sales have grown at about 5% per year over the last five years. This is a company that is stable, growing, and turning in stellar returns each and every year.

There are three final reasons to like Becton, Dickinson. One, there is a new drive in the U.S. to require safe needle technology, and several companies have come out with solutions. Of course, Becton, Dickinson is one, and it is expected to generate millions in sales in 2003 from a market that did not exist a year ago. These will cannibalize some existing sales, but the unit price for safe needle sharps is about $0.25 per, as compared to the $0.10 per that is generated from the existing technology. This will provide a massive ramp up in revenues.

Second, this same technology has only been adapted thus far in the U.S., but Becton, Dickinson is dominant worldwide. The company operates in environments throughout the globe where its products are in undersupply. And finally, while there is significant pressure to trim medical costs by HMOs, governments, and others, the hypodermic needle, as a sub-one dollar per unit cost, is unlikely to be anywhere near the top of products to which the cost becomes an issue, unlike many drugs and therapies.

So, Mom, this is the company I think you should buy into. Just don't ask me to demonstrate its products for you.

Bill Mann doesn't own shares of Becton, Dickinson, but you can see what he does own on his profile. The Motley Fool is investors writing for investors.

A Stock for Mom represents the opinion of one Fool and should in no way be taken as the opinion of either The Motley Fool, Inc. or the company in question, or as representative of anyone or anything other than that specific Fool's thoughts.

Next: Mom's 2001 Returns »