Although joint-replacement surgery isn't pleasant, it's popular. And Biomet (BMET) is finding the business of making artificial hips, knees and shoulders a profitable one.
Biomet sells its body-part implants and surgical accessories such as pins and screws to orthopedic and oral surgeons throughout the U.S. and in 100 other countries around the world. Biomet also makes bone-growth stimulators, orthopedic supports and surgical instruments.
Dow Theory Forecasts lists Biomet as one of its "Focus Buy" stocks, a list of companies singled out for their potential for 12-month gains. According to the venerable newsletter, the stock is reasonably priced given its strong financials and relatively low risk.
Biomet has no long-term debt and boasts a 22% return on equity. Revenues, earnings, cash flow and margins are all rising steadily. The stock trades at 24 times the 2004 consensus earnings estimate of $1.26 per share. Analysts expect that profits will grow 15% a year, on average, over the next three to five years.
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