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A High-Tech Health Care Giant

The auto industry is running on empty. Financials are stuck in a rut. Airlines, housing, construction firms, newspapers, retailers and just about every other sector has taken a beating. Some healthcare firms, however, are fit as a fiddle! Whether the economy is good or bad, one universal truth is that people will always get sick.  One of my favorite companies to help fight those diseases and keep Americans healthy is healthcare powerhouse Covidien (COV).

My favorite products created by Covidien are called "radiopharmaceuticals." These space-age injections or drinks contain a low-dose of radiation which shows up in real time on imaging systems. It's like a three-dimensional, color X-ray! These innovative products are used by doctors to check out everything from your blood flow in a specific area to imaging of an entire organ like your kidney.

And that's just one segment of this company's business. Covidien offers an extensive product line that spans medical devices, imaging systems, pharmaceuticals and medical supplies. What's more, the company sells its stuff all over the world! From hospitals to long-term care facilities, to alternative medicine clinics and patients that need care at home, Covidien's products have a huge market. It operates 65 manufacturing facilities in 16 countries, and has more than 4,000 sales representatives in more than 50 countries.

Although the company's profitability has been squeezed as of late, it's not because of the greater economy's troubles; rather, it's because Covidien has upped the ante on Research and Development. You see, Covidien knows that to stay ahead in the healthcare game, it's got to spend money on innovation to enhance its current product lineup. But don't worry; all this spending now will lead to tremendous opportunities ahead!

Aside from being in a recession-proof industry like healthcare, COV's global reach helps the company avoid some of the troubles we're facing here in America brought on by the credit crunch and mortgage meltdown. Headquartered in Bermuda, it may not be on everyone's radar. But it's been a member of my Global Growth Buy List since the end of July.

See, Global Growth concentrates on emerging markets and global corporations that are surging independently of the American stock indexes like the S&P 500 and the Dow Jones. We invest in nations like Brazil, China, Ireland and Greece, avoiding regions facing recession or unrest and concentrating on the places where business is thriving.

Covidien is one of those great global buys. I wanted to share this pick with you this week because COV recently announced a venture-capital life-sciences firm in India may buy its specialty chemicals business, Mallinckrodt Baker, for about $450 million. If this sale goes through, you can expect this stock to soar almost overnight!

Healthcare companies are pretty safe bets in this current economic climate, and COV is one of the industry leaders.

Dennis, 09.06.08:

If you think that medical related companies are recession proof you either haven't been paying attention or haven't been around long enough to see the cycles. They trail the economy by 18 months or more...people lose their jobs..then their insurance and stop going to the doctor. Most Drs. will tell you their visits are down, particularly elective procedures like plastic surgeries. I learned the hard way 22 years ago when I went into medical sales thinking that medicine was recession proof it just reacts on a delayed cycle. Covidien is a good company and deserves a good look.

Tony, 09.04.08:

COV's medical devices are everywhere...They use them A LOT overseas. It's thanks to this division that the company has been able to sustain itself since the Tyco spinoff.