Cantel Medical: Good Growth in Healthcare Sterilization

Bill Gunderson
|
Posted: Jun 11, 2015 12:01 AM
Cantel Medical: Good Growth in Healthcare Sterilization

Cantel Medical (CMN) provides infection prevention and control products and services to the healthcare industry. The company was founded in 1963 and is headquartered in Little Falls, New Jersey. Cantel’s three main business segments areas are: Endoscopy, Water Purification (Dialysis Medical Water), and Healthcare Disposables.

Cantel Medical just reported 3Q earnings on June 9th, and beat analyst expectations handily by $0.04. They also beat revenue estimates as well, experiencing sales growth of 18% thanks in part to the successful integration of a string of recent acquisitions.

The company has made 26 acquisitions since 2000. Most recently, Cantel expanded its European presence by acquiring two European providers of endoscopy products: PuriCore International (July 2014), in the U.K. and International Medical Services (November 2014) in Italy. In Healthcare Disposables, Cantel Medical acquired Sterilator (January 2014) an acquisition which enhanced the capabilities of new product development for the Crosstex brand.

Cantel Medical’s strategy for growth is to continue market expansion, grow organically through new products, and make further strategic acquisitions to expand markets and margins.

In terms of its product segments, Endoscopy has a large and growing addressable market totaling over $4 billion, as a key diagnostic means to detect colorectal cancer. Driving sales in its water purification and filtration segment, dialysis patient growth for end-stage renal disease is also growth at a rate of 3-4% per year. And Cantel is the leading branded player (Crosstex) in the U.S. dental market for healthcare disposables.

Given all these growth opportunities, it is no wonder Cantel Medical is delivering strong results. And its share price is being rewarded accordingly.

Cantel Medical stock is up more than 19% YTD. So let’s take a closer look at the stock using our Best Stocks Now! research methodology.

Cantel Medical is a Small Cap medical stock with a market cap of $2 billion. The stock has an Aggressive risk profile and I am long Cantel Medical for my Aggressive Growth accounts.

On a valuation basis, Cantel receives a Value Grade of B. Its trailing PE is 46 and its forward PE is 32, but the stock is growing at a rate of 18% and is not really a “value” play. The stock also pays a small dividend yielding 0.20%.

Cantel Medical is up 38% over the last year and is now up 19% YTD post its recent earnings results. It receives a Momentum Grade of B and a Performance Grade of A relative to the S&P 500 Index. It has definitely outpaced the sideways returns of the market this year.

Cantel Medical ranks #118 out of the more than 4100 stocks in the Best Stocks Now universe. It receives a stock grade of A- and rates a Buy. The Healthcare sector continues perform well this year as a key growth area of the market and ranks among the top Best Stocks Now sectors.

Cantel Medical has exposure to many key growth segments and continues to deliver for investors.