A Medical Device Maker with Momentum

Despite soaring volatility, the U.S. Dow Jones was up 0.21%, the S&P 500 rose 0.53% and the NASDAQ soared 2.31%. The MSCI Emerging Markets Index, however, fell 0.54%.

Big gainers in your Bull Market Alert portfolio included Cirrus Logic, Inc. (CRUS), which rocketed 13.15%; B&G Foods Inc. (BGS), which jumped 5.47%; and Take-Two Interactive Software (TTWO), which rose 4.66%.

Cirrus Logic, Inc. (CRUS) and Take-Two Interactive Software (TTWO) each hit a new 52-week high.

The iShares MSCI Emerging Markets (EEM) fell below its 50-day moving average and moved to a HOLD.

This week, Bull Market Alert return to its small-cap focus with New Jersey-based Cantel Medical Corp. (CMN).

Founded in 1963, Cantel Medical Corp. (CMN) is a medical device supplier that provides infection prevention products and services healthcare providers worldwide.

With healthcare a hot sector in the U.S. stock market this year, it is no wonder that 10 top-performing small-cap momentum and growth-investment strategies have included Cantel in their portfolios.

Cantel is something of a local entrepreneurial success story, with its former CEO Andrew Krakauer recently named New Jersey’s Entrepreneur of the Year. Cantel has prepared the path for an even bigger future, as Jorgen Hansen replaced Andrew Krakauer as Cantel’s CEO this past summer.

Hansen recently reaffirmed his commitment to Cantel’s aggressive expansion strategy. On the one hand, Cantel has been growing organically. It has several products in its pipeline, including a visualization instrument for endoscopy, which recently received the green light from the FDA. Cantel plans to launch several other products in the next couple of years to keep its momentum going.

On the other hand, Hansen has stated he wants to build a big mergers and acquisitions team to explore new acquisition opportunities. That is nothing new. After all, between 2010 and 2016, CMN completed 16 acquisitions totaling $333 million. Recent additions include Accutron’s portfolio of sedation single-use nasal masks and equipment as well as Crosstex International, Cantel’s first entry into the dental equipment market.

Cantel’s challenge is to integrate all of its new acquisitions into an integrated whole. However, Cantel’s management has proven to be up for the task, with both sales and margins growing over recent years. Sales are expected to 18% in fiscal year 2017. Operating margins could hit 15% next year.

Overall, Cantel has a strong track record, little debt and a strong leadership team. It is a solid, if expensive, bet on a growth story in a hot sector.

So buy Cantel Medical Corp. (CMN) at market today and place your stop at $71.00.

After the stock’s recent surge, its options are overpriced. So I am holding off on recommending options this week.

Portfolio Update

The TJX Companies, Inc. (TJX) traded sideways last week, giving back just 0.12%. TJX has been correcting itself since releasing a disappointing earnings report several weeks ago. However, a look at a TJX’s 2016 chart reveals a stock that has a strong penchant for bouncing up from its 200-day moving average (MA). With TJX currently trading at the 200-day MA for the fourth time this year, TJX seems primed to move higher once again in the coming weeks. TJX is a HOLD.

Healthcare Services Group, Inc. (HCSG) rose 1.50% over the past trading week. HCSG is in the same boat as The TJX Companies, Inc. (TJX). HCSG also has held its 200-day MA for most of the year after suffering a similar recent correction. Now trading just above the 200-day MA, HCSG is also another position to watch for gains in the near term. HCSG is also a HOLD.

Spire, Inc. (SR) traded flat last week to gain 0.63% and remain just under its 200-day MA. Once again, SR is a stock that rose above the 200-day MA almost exactly one year ago and has not traded below this level until last week. SR is a HOLD.

B&G Foods Inc. (BGS) jumped 5.47% last week. BGS owns several strong food brands such as Pirate’s Booty popcorn, Cream of Wheat breakfast porridge and Green Giant frozen foods. BGS is now in negotiations to acquire another well-known brand, Mazola cooking oil. BGS is just below the 50-day MA and stands as a HOLD.

NorthWestern Corporation (NWE) added 1.58%. NWE is yet another position in your portfolio that has bounced upwards from the 200-day MA many times over the past 52 weeks of trading. Now trading just below the 200-day MA, the utility holding company also has significant potential upside from current levels. NWE is a HOLD.

Cirrus Logic, Inc. (CRUS) soared 13.15% and was the week’s biggest winner in your portfolio. The explanation for the surge? As a stock linked strongly to Apple (AAPL), you need not look further than Apple’s prospects. With iPhone 7 pre-orders looking healthy, related technology component manufacturers are also enjoying a lift alongside Apple. CRUS is a BUY.

Sincerely,

Nicholas A. Vardy