Sandy Lighthouse's  Instablog

Sandy Lighthouse
Send Message
Self employed for 35 years in construction. PHD from school of hard knocks. Tend to have a macro macro perspective.
  • One Good Stock A Year: ISRG 0 comments
    Jul 2, 2012 9:40 PM | about stocks: ISRG

    Being a "buy and hold" investor, my personal goal is to identify one really good stock a year. Such a stock should meet the following criteria:

    1. "Blue Chip" in every regard: Best in class product, top quality management, consistent earnings growth, little or no debt, and a large "moat".

    2. A realistic possibility of stock price quadrupling in 5-10 years.

    3. A product or service that is disruptive with a large addressable market.

    4. There should be some market misperception that leads to a low current valuation, i.e.., I should have an edge.

    Intuitive Surgical (NASDAQ:ISRG) is my pick for this year. ISRG is no secret, and clearly meets the first three criteria IMHO. Let me explain why I think it meets the fourth criteria.

    The market is valuing ISRG on the basis of traditional statistical valuation models. The market does not recognize the potential depth and breadth of the industry disruption of the "Da Vinci" system, or the way that innovation unfolds.

    First some low hanging fruit is picked as an innovative product economically solves a clearly defined problem. Then the innovation is improved through user feedback and real world experience. End users find effective uses that were originally unintended. Second and third generation products are introduced and market adoption starts to accelerate. Truly great products become an industry standard that defines a whole new and revolutionary way of doing things.

    I think the Da Vinci robotic surgical system fits this model perfectly, and is still early in the cycle. Doctors will find new and unintended uses for the system. New procedures will be approved. Lesser skilled doctors will produce superior results leading to wider spread system adoption. Scale will increase lowering costs, further increasing adoption.

    I think ISRG has at least a ten year run in front of it.

    Disclosure: I am long ISRG.

    Stocks: ISRG
Back To Sandy Lighthouse's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Most Commented
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.