Healthcare Sector Ideas

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Steris - >>> 3 Surefire Stocks to Watch In The Coronavirus Pandemic

COVID-19 has heightened the demand for companies that specialize in infection control.


Motley Fool

by Jim Halley

Oct 28, 2020


https://www.fool.com/investing/2020/10/28/3-surefire-stocks-to-watch-in-the-coronavirus-pand/


Due to the coronavirus pandemic, it would seem that stocks of infection control companies are no-brainer investments, but it's not that simple.

While companies and healthcare facilities have become more vigilant when it comes to preventing disease, the pandemic has also considerably slowed business for some clients of infection control businesses. With fewer people traveling and eating out, the hospitality industry is bringing in less business. While hospitals are being even more careful about infection control, fewer people are visiting their physicians and dentists, so infection control business from those industries has also fallen.

But these circumstances actually present a real opportunity. As more businesses re-open, there will be a growing need for infection control expertise. This industry was already expected to grow at a 6.3% compound annual growth rate (CAGR) through 2027, according to one report published before the pandemic began.

Steris (NYSE:STE), Johnson & Johnson (NYSE:JNJ), and Cantel Medical (NYSE:CMD) are three healthcare companies with infection control businesses that are worth watching.

Steris is already cleaning up

Steris stock is up more than 21% year to date, and Steris recently announced it is in the process of an $850 million deal to buy Key Surgical. Steris CEO Walt Rosebrough said Key Surgical's core business of sterile processing, operating room, and endoscopy fits well with Steris's own lineup of infection prevention products, which includes surgical masks.

The company's financials have been on a nice upward trajectory, with increased earnings for nine consecutive years and increased net income for the past four years.

The company did report a 4% drop in revenue in the first quarter of 2021, but its reported net income of $88.2 million represented a 4% rise over the same period in 2020 (the company's fiscal year ends June 30). The company credited lower operating expenses and a $5 million one-time benefit from operating room integration revenue for the higher net income.

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