C.R. Bard Inc. $88 - New York symbol BCR

C.R. BARD INC. $88 (New York symbol BCR; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 103.4 million; Market cap: $9.1 billion; WSSF Rating: Average) makes medical devices in four main areas: Vascular products such as stents and catheters (24% of 2006 sales); Urology products such as drainage and incontinence devices (30%); Oncology products that detect and treat various types of cancer (24%); and Surgical Tools (18%). Other devices provided the remaining 4% of sales. The company’s wide array of products cuts its reliance on a single device. Most of its products are single-use devices that hospitals and clinics must constantly replenish. That gives Bard predictable revenue streams. Overseas markets account for 30% of Bard’s sales, which cuts its geographic risk. In the three months ended June 30, 2007, earnings rose 19.7%, to $0.91 a share from $0.76 a year earlier. Sales grew 9.9%, to $545.7 million from $496.5 million. All of Bard’s main businesses reported higher sales except the Surgical Tools division, where the recall of a hernia repair tool led to an 8% drop in sales. The company has fixed this problem, so sales at this division should rebound in the second half of 2007. Bard has steadily increased its research spending, from 5% of sales in 2002 to around 7%. Accounting rules force Bard to write off these outlays every year, which hurts profits. But these investments should lead to new products that will spur long-term growth. The stock trades at 23.2 times the $3.79 a share Bard will probably earn this year. The $0.60 dividend yields 0.7%. C.R. Bard is a buy.