Chasing Value: Intuitive Surgical on the 2008 watch list

28 12 2007

Chasing Value: Intuitive Surgical on the 2008 watch list

Posted by: in Companies Competitive Strategy

Filed under: Competitive strategy, Top Picks 2007, Chasing Value, Stocks to Purchase, Intuitive Surgical Inc (ISRG), Technology, Ideal Stocks for 2008

My eight stock picks for 2008 won’t include one of my favorites, Intuitive Surgical, Inc. (NASDAQ: ISRG) because of current appreciation in the stock price. Since I am basing my picks on the December 28 close, in two days, it just looks too expensive. The company is not only the leader in producing patented robotic surgical systems; it is the only game in town.

Intuitive Surgical was a strong candidate at $280 to $290, about 20% off it’s high, but not at Wednesday’s closing price of $335.24. It has a trailing P/E of 109 and a forward P/E of 77 if you believe projections, and I do since ISRG is constantly beating them. However, this stock has a 52-week low of $86.20 and a high of $359.59. That’s very high and a 400% bounce has to leave even Apple Inc. (NASDAQ: AAPL) and Google Inc. (NASDAQ: GOOG) enthusiasts astonished.

I’ve written favorably about ISRG in the past 22 months, so perhaps some of my readers have shared in the gains. It is one of the few stocks I have mentioned that does not pay a dividend, but it has beat all estimates every year since I purchased it, and is likely to do so again (albeit with fits and starts). It has hardly penetrated its potential market, and already it has grown into a $12 billion company.

At this point, I would definitely put ISRG on my watch list, and perhaps like many volatile stocks, there would be an chance to own it at a lower price.

Disclosure: I own shares of ISRG in several portfolios.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.