Health care, healthcare or health-care, any way you slice it… the bulls are registering PROFIT in the sector for 2008. In fact, over the last month they have been one of the only consistent gainers in the entire market! I got some great movers that have traded up and subsequently gotten hit and are now undervalued. Value and defense is how we trade the market in 2008… so a big dog who has a favorable year in store should get the call as well. I smell a victory, lets make some money.

Jimvesting Picks Intuitive Surgical (NYSE: ISRG)
Robotic surgery. No longer do we have human error, the da Vinci system by Intuitive Surgical has taken care of that. Fourth-quarter earnings absolutely stomped expectations from ISRG, following higher than expected sales of the expensive surgical system. There are now 795 systems deployed worldwide, and they sold 78 last quarter. Each system is very expensive, but ISRG is proving to investors they mean business. They more than doubled quarterly profit and increased guidance for 2008.

I think projections for 2008 were actually conservative, and Intuitive Surgical should blow through them. Even after the initial surge, I still see 20%+ upside potential for growth over the next twelve months. I expect these guys to place 75-80 new systems next quarter, and with profit ever-increasing from existing device accessory parts, it seems like a bulldozer stock in my eyes. I am convinced that this robotic surgery technique will become a surgical niche standard over the next few years. Many were skeptical of the capabilities of the system, but little if any complaints or problems have been filed so far. 51% of physicians expect their facilities to purchase additional da Vinci system(s) over the next three years. 73% of urologists indicate they no longer perform open prostatectomy procedures without a da Vinci system. The product works, people love it, you will be sorry if you turn your nose up at the market’s stock pricing.

Jimvesting Picks Gilead Sciences (NYSE: GILD)
Gilead is a front-running biopharmaceutical company that has enjoyed steady growth for years. Without exception, I am affirming that Gilead will outperform the market and see growth in 2008. With this in mind, GILD is a safe haven in a shaky market. However, the catalysts don’t go unnoticed! They have a rock-solid HIV franchise and a management team that knows how to generate strong growth in EPS and revenue. They’ve got the free cash flow to stay afloat, and the potential for a big winner in HIV diagnosis.

I’m putting a target price on Gilead for $49, based on analyst consensus and my own findings. Okay so they beat earnings out by a cent, not great, but at this point Wall Street doesn’t care… it’s all about 2008 and Gilead has the cure! Better than expected 12-month sales guidance was a surprise, and we still see good upside potential in the company developing a new hit. These guys could take a hit in the short-run, setting up a nice buying opportunity. I am giving them the green light at an attractive price due to upside potential from the pipeline, consistency in earnings and margin growth, stability from being an industry leader and, more importantly, expected gains in non-HIV franchises.

Jimvesting Picks Inverness Med Innovations (NYSE: IMA)
Inverness has gotten slammed in 2008, down more then 15% YTD, there is a mad dash of cross-selling which may be re-invigorated with the recent acquisition of Matia… but when the selling stops… the bull kicks in, and in a very big way. IMA is already undervalued, so they are definitely a confident long-term positive player. After acquiring MATR, Inverness Innovations will be the #2 in disease management. Despite sloppy performance in 2008 thus far, analysts are maintaining buy ratings… I smell something here.

Significant long-term opportunities are at hand now for Inverness, I simply love the acquisition and think it should effect cash EPS positively in the short-term. Furthermore, the company is trading at a huge discount to its peers (25 times earnings versus an industry at 34x). Inverness is in a great position to rebound at $49 and change versus my target price of $66. Management is implementing cost-efficiency initiatives to accelerate growth, something they have proven to handle in the past. Their pipeline is strong and growing. Analysts from Jeffries & Company recently hosted an event with IMA’s management team and reported comments about new products and the growth potential behind the home testing market. Checking up on this, fourth quarter results are looking up… and the guys at Seeking Alpha have a target at $90, nearly double the current market value.

Jimvesting Picks Saint Jude Medical (NYSE: STJ)
STJ is a terrific medical supplier that recently produced very strong earnings for the fourth quarter and increased guidance for 2008. I believe they are trading at a premium, at 17-times-earnings for where I see them in 2009. With so much upside and relatively low risk, I could see Saint Jude’s outperforming the market 15%+ over the next twelve months. In the Cardiovascular-device group, STJ is definitely the most attractive being the best in class with an undervalued stock price around $40.

Saint Jude’s has got fantastic prospects for increasing their profit margins in 2008. They have some new products coming to the table like the CRT-D in Japan, and should see some profitable income from unfinished contracts signed over in 2007. I see STJ as being a more consistent competitor in the high-growth ICD (implantable cardioverter defibrillator) market, where they should experience most of their expansion. In the most recent earnings call, STJ topped estimates by a nickel due to strong sales and higher growth margins. They also increased sales projections from an expected $4.11 billion to a range of $4.14-to-$4.31 billion, bullish but doable… and I think they pull it off.

That’s a wrap for this week, the healthcare sector definitely has some interesting plays for a down market.

-Jimvesting

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4. An Intuitive Investment? – Intuitive Surgical (ISRG) is Poised to Grow in 2008
5. Stock Market 2008: Consumer Cyclical