The Federal Reserve continued to raise interest rates during its meeting, causing market volatility to return. The S&P 500 is in a bear market. It's almost certain that the next two Fed meetings will produce interest rate hikes of 75 bps, which will continue to push pressure on liquidity, and therefore, financial assets. If investors want to allocate capital during times of volatility, they can look to defensive stocks with long-term sustainable competitive advantages and consistent cash flows.
MarketBeat.com - MarketBeat The Da Vinci system, which is the most successful product of the company, is increasingly being used in surgical theatres. The medical equipment market is expected to grow at a rate of 16% per annum over the next eight years, and the medical robotic market is expected to grow at a rate of 42% per annum over the same period. The stock is down 15% compared to the broader market which is down over 20%, but the stock is still doing well.
On average, the medical industry has better economics. More people need medical care as they get older. The global healthcare industry is investing in technology to improve medical outcomes around the world, which improves the fortunes of companies such asIntuitive Surgical. China, Japan, and Asia are at the forefront of demand, with growing economies, and increasing levels of investment helping them move away from traditional surgical tools.
For the past five years, ISRG's sales and earnings have increased. The company has a P/E of 48 and a forward P/E of 33. The market is attaching a premium to the stock because of the consistency of growth and revenue. One of the positives for the stock is that it doesn't have a lot of debt, which means that it won't face any real issues during the current interest rate cycle. If you're looking for a long-term investment, consider the stock if you want a stable cash flow.
The company is in the unregulated energy space. Its business is centered around an integrated power company. Approximately 6 million residential, commercial, industrial, and wholesale customers are served by the company. Natural gas, coal, oil, solar, nuclear, and battery storage are some of the fuels it uses to generate electricity.
The smart grid is giving users more control over their power use. The prices in the energy sector are on the rise. The earnings of the company should be less volatile than other sectors because it is central to the areas it provides power. Results have continued to come in strong through the first few quarters, and states such as Texas where it operates large parts of its business had an unusual hot summer, which should help drive earnings further over the next couple of quarters.
With the rate at which energy prices are increasing, it is possible that the stock price will increase over the next few quarters. The company has relatively manageable debt with debt to equity of 1.5. The inflation reduction act passed in congress will provide funding for carbon reduction projects, which is great news for the company. Despite the uncertain macroeconomic environment, the utility industry remains firm and is suitable for those looking to overcome volatility.
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