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LeMaitre Vascular (NASDAQ: LMAT), CVS Health (NYSE: CVS), and Esperion Therapeutics (NASDAQ: ESPR) are far different companies but have at least one trait in common: They're top stocks to buy this month, according to three Motley Fool contributors. Read on to find out why they think a big drop in share price pushed LeMaitre Vascular into bargain territory, a megamerger makes CVS Health stock worth owning, and fast-approaching clinical trial data could spark a rally in Esperion Therapeutics shares.
A proven winner at a cheap price
Brian Feroldi (LeMaitre Vascular): The medical device industry is a great hunting ground for investors because healthcare providers tend to remain brand loyal when they find something they like. What's more, they tend not to be sensitive to price since they are not the ones who pay for the products.
IMAGE SOURCE: GETTY IMAGES.
One medical device company that I'm quite fond of is LeMaitre Vascular. It focuses on selling niche products to vascular surgeons, which is about a $5 billion market. Taking a niche focus helps to insulate the company from competition since the markets are usually too small for the large medical device companies to care about. However, when cobbled together, those niche markets add up to a $1 billion revenue opportunity, which is quite significant.
A look at LeMaitre's history shows that it has developed a winning formula. Revenue and net income have grown by 114% and 3,210%, respectively, over the past decade. The prosperity has translated into share-price appreciation of more than 700%.
Despite boasting a rock-solid business model and a debt-free balance sheet, LeMaitre's stock has been in free fall for the past few weeks after management dialed back guidance for the full year. While I'm not thrilled with the news, the company is still projecting earnings-per-share growth of 19% for 2018, which is nothing to sneeze at. With shares currently trading at the lowest valuation that we've seen in years, I think this is a great stock for forward-thinking investors to check out.
A truly unique, vertically integrated healthcare titan
Chuck Saletta (CVS Health): In just a few short months, pharmacy titan CVS Health will likely find itself in a unique position among companies. Once its acquisition of Aetna (NYSE: AET) closes, it will be a vertically integrated healthcare titan like no other. It will have:
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Health insurance
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Pharmacy services
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Health clinics
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Claims management
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Infusion services
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Wellness products and services
All under one corporate umbrella. If any company anywhere would then be in a position to wrangle cost efficiencies out of the morass that is healthcare delivery, it'd be that one. After all, the insurance company and the patient are traditionally the only parts of the chain that are actively looking to keep costs in line; the others all get paid to deliver services. But if the same company delivered the service as paid the bills, more parts of the chain will be in a position to care about controlling costs.