Tag Archives: MAKO

Business, Finance, Occupation & Industry

Buy These 2 Small-Cap Stocks Before They Rebound

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By Steve Symington, The Motley Fool

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There’s a certain thrill involved with holding small cap stocks in your portfolio. After all, given the relatively tiny size of their underlying businesses, these are the stocks which often hold the greatest prospects for growth over the long run.

To be sure, who wouldn’t love to see his or her portfolio explode to the upside as today’s small caps become tomorrow’s massively profitable industry giants?

So what’s the catch? Small-cap stocks tend to be much more volatile than their larger brethren. As a result, as long as nothing has happened to significantly change your buying thesis, you need to be willing to stick it out through thick and thin to realize truly substantial long-term gains.

With that in mind, here are two small cap stocks which are trading significantly below their 52-week-highs, and why I think you should buy them before they bounce back:

Company Market Cap % Below 52-Week-High Recent Price CAPS Rating
 (out of five)
 InvenSense $854 million 45% $10.15 *****
 MAKO Surgical $532 million 74% $11.27 *****

Source: Motley Fool CAPS

Sensing long-term opportunity
First up, shares of motion sensor specialist InvenSense are still reeling from a number of disappointing earnings reports and downgrades over the past year. The most recent “bad” news came from analysts at Maxim three weeks ago, who maintained their “Buy” rating on the stock, but lowered its price target to $12 per share, from $17. Even if Maxim is justified in its downgrade, however, I’m betting it’s difficult to find too many investors who wouldn’t be happy with an 18% gain should the stock reach the stated target

What’s more, InvenSense boasts strong free cash flow, and a sterling balance sheet, with $193 million in cash and no debt. In addition, its shares currently trade at 20 times trailing earnings and just 13.5 times forward estimates — a perfectly reasonable premium for a small-cap stock whose products have the potential to play an integral part in the fast-growing global market for mobile device sensors.

Robotic-assisted profits
I’ve made no secret of my optimism for shares of MAKO Surgical , despite the company’s gut-wrenching fall from grace over the past year; 2012 included one particularly brutal quarterly earnings report, which caused a single day drop of as much as 37%. Now, I’m a patient guy, but I have to admit that that one definitely made me think twice about selling what still remains one of my largest personal holdings. 

On one hand, MAKO management had undoubtedly overestimated its ability to sell expensive robotic surgery equipment to hospitals during one of the most challenging economic environments in recent history. As a result, they lost plenty of rapport with investors after twice being forced to lower their system sales guidance.

Even still, I remain convinced MAKO‘s punishment doesn’t fit the crime, especially after management provided some solid answers to wary investors’ questions during its most recent quarterly earnings call.

Foolish final thoughts
When the rubber hits the road, I think InvenSense and MAKO both

From: http://www.dailyfinance.com/2013/04/11/3-small-cap-stocks-you-should-buy-now/

Business, Finance, Occupation & Industry

The Shocking Truth About This Hated Obamacare Tax

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By Dan Caplinger, The Motley Fool

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Obamacare has brought on intense debate from impassioned advocates both for and against the historical health care legislation. Yet one rare place where bipartisan support has emerged is in condemnation of a controversial tax on medical-device manufacturers that has threatened a highly innovative industry and put thousands of high-paying jobs at risk.

Last month, the U.S. Senate voted on a nonbinding resolution to call for the repeal of the 2.3% tax on sales of medical devices. Although the vote was 79-20 in favor of the resolution, with 33 Democrats supporting it alongside 46 Republicans, the procedural vagaries of the Senate mean that the tax will remain in effect, and with the opposition of key Senate leaders, even the supermajority favoring the tax’s repeal may be powerless to take further action. That’s bad news for the companies that have been saddled with paying the tax.

U.S. Senate. Source: Wikimedia Commons.

Understanding the medical-device tax
At first glance, the 2.3% tax on medical devices seems like a drop in the bucket that many highly profitable device-makers should be able to shoulder easily. Yet what many people don’t understand is that the tax is on each company’s gross sales of medical devices, rather than the profits that those sales generate.

The impact of the tax, therefore, is much larger. Look at medical-device giant Medtronic , for instance. It doesn’t get all of its sales from medical devices, but they make up a substantial portion of its overall business. With a reported profit margin of about 21% and assuming that its profits are evenly distributed across its product lines, imposing a tax of 2.3% would be equivalent to a roughly 11% surtax on Medtronic’s income.

The lower a company’s profit margin, the greater the impact of the medical-device tax as a proportion of net income. For the highly profitable robotic surgical giant Intuitive Surgical , a medical-device tax of 2.3% equates to less than an 8% additional levy on net income from its da Vinci surgical systems using the same assumptions as above, thanks to the company’s 30% profit margin. But for Stryker , which has a profit margin of about 15%, the medical-device tax is equivalent to a greater than 15% surtax on income from medical devices.

The companies that are hit hardest by the tax are those that are already unprofitable even before paying the new levy. For up-and-coming robotics-maker MAKO Surgical , which has already lost $32.5 million on revenue of slightly more than $100 million over the past 12 months, imposing what could be up to $2.3 million in additional medical-device taxes not only adds insult to injury but threatens MAKO‘s ability to keep growing.

How the industry is responding
Even before the tax took effect, companies took steps to reduce its potential impact. Stryker said last November that it would lay off 5% of its workforce in order to save $100 million in …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

MAKO Gets Serious About Protecting Its Turf

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By Steve Symington, The Motley Fool

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The world of robotic surgery sure is getting ugly, isn’t it?

Soft tissue specialist Intuitive Surgical , for instance, has fallen more than 17% over the past month after the fallout of multiple negative industry reports, as well as a recent FDA inquiry into its procedure safety and surgeon training. Of course, few are convinced that this particular case presents any real trouble for Intuitive, but that’s likely little solace for worried shareholders who have had to endure the pullback.

Then, just last month, Intuitive’s orthopedic cousin MAKO Surgical filed a lawsuit against one of its former sales managers, as well as his new employer — which just so happens to be MAKO competitor Blue Belt Technologies. And yes, as you might recall, that’s the same company that fellow Fool Dan Carroll pointed out recently received FDA approval to perform partial knee replacements using its unique NavioPFS system. According to the suit, MAKO is allegin that its former employee not only violated his non-compete agreement but also provided stolen client data and trade secrets to his new employer.

The sincerest form of flattery…
Now, MAKO just announced in a press release that it has filed complaints against U.K.-based Stanmore Implants, claiming that the company has violated three patents related to MAKO‘s computerized orthopedic surgical devices and software. Interestingly, just last month Stanmore received its own 510(k) clearance from the FDA to market its Sculptor Robotic Guidance Arm for partial knee resurfacing, and the company had intended to release the system to a select group a surgeons around the middle of this year. 

The most ironic thing about Stanmore being given the go-ahead by the FDA, however, is that MAKO‘s RIO platform actually helped pave the way for its approval. Sure enough, just weeks before the FDA‘s final decision, the agency noted (link opens PDF) that the Sculptor RGA was shown to be “substantially equivalent” to the previously cleared device from MAKO “with respect to its intended use, indications for use, technological characteristics, and performance characteristics.”

What’s more, at first glance Stanmore’s Sculptor RGA does look awfully similar to MAKO‘s RIO System:

Stanmore Sculptor RGA, left, and MAKO Surgical’s RIO system. Sources: Stanmore and MAKO Surgical.

In addition, here’s how Stanmore’s website describes its own platform:

The Sculptor RGA is a unique bone sculpting solution based on Stanmore’s patent protected ‘Active Constraint‘ technology. Dynamic ‘Active Constraints’ confine a bone cutting tool to a defined volume in space by integrated hardware and software. This ‘safe area’ in which the cutting tool operates is defined by the surgeon prior to the operation using Stanmore’s proprietary planning software.

I don’t know about you, but I’m fairly sure many folks would be none the wiser if someone were to simply replace the word “Stanmore” with “MAKO” in that description. And considering that Stanmore claims its technology was used in clinical studies as early as 2004 — the same year MAKO Surgical was founded — I’m …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

5 Stocks That Bears Are Avoiding

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By Rick Aristotle, Munarriz, The Motley Fool

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Fear is never universal.

Yesterday I went over five stocks with short interests at 52-week highs. Today I’m going to look at the other end of the spectrum.

There are plenty of stocks where the worrywarts have been running for the hills. The five stocks that I’ll be going over here are either at or near their recent lows when it comes to the number of shares sold short.

Why are fewer investors betting against these companies? Every stock has a unique story to tell. For investors, there are two opposing ways to approach the data.

A bull will see it as validation. The market agrees with the sentiment. A bear can approach this list from the contrarian perspective. Unlike yesterday’s list of prime candidates for a short squeeze, there are apparently fewer skeptics to sway here.

Since the stock exchanges offer up short interest twice a month, giving us 24 snapshots a year, let’s look at the mid-February tallies that were provided late last week and compare them to the bearish wagers placed just six months earlier.

Company 

Feb. 15, 2013

Aug. 15, 2012

Netflix

8.1 million

14.3 million

Facebook

25.4 million

88.0 million

MAKO Surgical

11.4 million

14.1 million

Lennar

32.8 million

33.7 million

SodaStream

7.7 million

8.9 million

Source: Barron’s.

Feeding the bears
Netflix has seen its stock more than triple over the past six months, forcing a lot of bears to scramble and cover their short positions.

Cynics will argue that now is the best time to take a stance against the leading video service, but Netflix continues to grow its global audience and ink the content deals that make it difficult for anyone else to catch up.

Netflix now has more than 33 million streaming customers worldwide. The valuation is stiff, sure, but there doesn’t seem to be any chance to derail the niche leader after last month’s debut of House of Cards positions Netflix as a vastly cheaper yet far more thorough HBO.

Facebook was a widely lampooned IPO last year, and it wasn’t a surprise to see shorts balloon to 88 million three months after going public in May. Investors feared that the leading social networking website operator was going to suffer in the mobile migration. There were also reports of the site’s popularity waning.

Facebook blasted through the concerns. Active monthly users have gone on to top 1 billion, and new mobile monetization efforts are turning the growing engagement of Facebook on smartphones and tablets an opportunity instead of a challenge.

MAKO Surgical shorts are near its 52-week low of 11.3 million.

MAKO is the company behind the RIO surgical robotics platform that is used for orthopedic procedures. Unlike Netflix and Facebook, which have been rallying, MAKO shares are trading near their lows.

MAKO‘s stock took a hit after the company warned of a slowdown in orders for new RIO systems a few months ago. Last week’s updated outlook is cautious. MAKO sees itself selling less …read more
Source: FULL ARTICLE at DailyFinance