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Without a doubt, investors seem to have a renewed appetite for the next level of earnings growth. Generative AI, GLP-1 weight loss drugs, and other breakthrough innovations (I don't know if Metaverse qualifies at this point) are looking to expand in some pretty huge markets. Some medical technology (medtech) stocks have the potential for impressive growth because they aim to improve the lives of people with specific problems.
As tech markets become increasingly volatile, investors may want to keep a close eye on many of the top medical technology and medical device companies, as they trade at reasonable prices.
Let's take a look at three medical tech stocks that are slightly undervalued relative to their impressive product portfolios and innovative pipelines, with the potential for solid stock appreciation in the coming years.
Intuitive Surgical (ISRG)
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intuitive surgery (NASDAQ:ISRG) is a $132 billion medical technology giant innovating at the cutting edge of surgical robotics. The company recently briefly topped an all-time high of more than $400 per share before briefly pausing, falling nearly 7%.
With da Vinci surgery numbers picking up in China, the company could get the tailwind it needs to ride the tailwinds of international expansion and push it to even greater heights as it puts the finishing touches on its recently approved fifth-generation robot. unknown.
Since bottoming out in late 2022, the stock price has fluctuated quite wildly. Demand for new surgical robots should be fairly cyclical, but new innovations (think new generation da Vinci) have the potential to fuel explosive growth. After all, it's hard for operators not to upgrade to the best equipment if it has the potential to improve patient outcomes.
In the future, the da Vinci 5 model could become a major growth driver for the company, as it outperforms previous versions in many metrics (such as improved accuracy, better force sensing, and increased processing power). Indeed, it's a very exciting time to own INTU stock, with its price-to-earnings ratio (P/E) of 67.2x being very reasonable.
Align Technology (ALGN)
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align technology (NASDAQ:Alignment) is an undervalued medical technology company stuck in a major rut. Stocks tumbled in 2021 and 2022 as the pandemic-driven boom finally busted. Arguably, the best time to get your teeth straightened was during lockdown.
While the company continues to innovate with new aligner products, demand is normalizing. ALGN Stock is a worthy endeavor for dental technicians. The new momentum it has enjoyed since November 2023 is likely to continue.
The company also expects decent growth in 2024, with sales expected to rise 6-8% as price increases are expected to begin. At the time of writing, the stock trades at a forward P/E ratio of 35.7x. It's not a cheap stock, but its commanding lead in the market means there's potential for further innovation, and I wouldn't sleep on this name if it ever came up again. I can't stay there.
Johnson & Johnson (JNJ)
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johnson & johnson (New York Stock Exchange:JNJ) stock has been in a perennial slump in recent years, and the stock is currently trading at a four-year low of approximately $146. The controversy over talcum powder has been a thorn in the side of the company for quite some time.
The company aims to return to a growth trajectory in its medical technology and pharmaceutical businesses. With many investors tired of waiting for JNJ stock to turn a corner, it might be worth buying a few shares of the $358 billion giant.
The company has ambitious plans to expand its medical technology from here. A deep pipeline of impressive devices (particularly in the interventional cardiovascular space) could help boost the company's sales growth and stock price significantly. But for now, the medical technology pipeline is unlikely to be valued highly by the average investor, who likely views this behemoth as a company whose best growth days are long gone.
At the time of writing, JNJ stock is trading at a reasonable P/E ratio of 20.0x. The dividend yield of 3.34% is also a nice bonus.
On the date of publication, Joey Frenette did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publishing guidelines.
Joey Frenette is an experienced investment writer specializing in technology and consumer stocks. A contributor to Motley Fool Canada, TipRanks, and Barchart, Joey excels at finding mispriced stocks with long-term growth potential in fast-paced markets.
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