Topic: Growth Stocks

INVACARE CORP. $30 – New York symbol IVC

INVACARE CORP. $30 (New York symbol IVC; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 32.4 million; Market cap: $972.0 million; Price-to-sales ratio: 0.6; Dividend yield: 0.2%; TSINetwork Rating: Average; makes home-care and mobility products, including wheelchairs and motorized scooters.

Many of Invacare’s customers rely on certain Medicare and Medicaid programs to help them pay for motorized wheelchairs and other equipment.

However, the future of this funding is uncertain in light of high government deficits. That uncertainty has weighed on Invacare’s sales in the past few years.

In response, the company has aggressively cut its costs by shifting production to low-cost countries and simplifying its product line.

As well, Invacare has replaced some-high-interest notes with a lower-interest loan. The refinancing cut Invacare’s interest charges by 37.7%, or $12.5 million, in 2010. It’s long-term debt of $238.1 million is a manageable 25% of its market cap.

As a result of these savings, Invacare’s earnings rose 18.1% in 2010, to $59.9 million from $50.7 million in 2009. Earnings per share rose 16.5%, to $1.84 from $1.58, on more shares outstanding. Sales rose 1.7%, to $1.72 billion from $1.69 billion.

Invacare’s earnings should rise to $2.01 a share in 2011. The stock trades at 14.9 times that figure.

Invacare is a buy.


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