Industry in Focus:

 INDUSTRY BRIEF: Medical Equipment is a subset of the healthcare sector. This industry is insulated from economic cycles so these stocks have held up much better than the overall market in the past year.  Nonetheless, medical gear stocks took a beating in the recent bloodbath, so valuations are intriguing as earnings remain fairly solid across the industry.

Industry leaders such as Medtronic, Baxter and Covidien are extremely diverse, selling everything from common healthcare supplies to proprietary, high-tech devices. Like the big drug companies, they often have predictable profits and relatively limited business risks, but also limited potential for upside surprises. As with the big pharma, though, some are quite dependent on new product pipelines and the condition of that pipeline often determines their favor as investments.

This industry also has many specialized players such as Hologic (advanced mammography) and IDEXX Labs (veterinary).  These specialists are naturally more volatile and attract more risk-tolerant investors seeking exceptional performance.

 Bottom Line: Investors looking for companies that can deliver solid earnings, even through a painful recession, are certainly going to find some great candidates in medical equipment.  That said, you'll need to scour the specialists for big growth and star potential in bull market conditions. In general, demographics are on the side of companies that cater to needs of an aging population.

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