3 Stocks to Hold for the Next 20 Years
A high-growth stock with insurmountable competitive advantages Sean Williams (Intuitive Surgical): Although a lot can change over the course of 20 years, one company that I believe can hang on to its competitive advantage in a consistently high-growth, high-demand space is Intuitive Surgical, a developer of robotic-assisted surgical systems.
One of the quirks that makes Intuitive Surgical unique is that its margins should actually increase over time. Though you might think that the company's expensive da Vinci surgical systems are what drive its margins, that's really not the case. These machines are intricate and costly to make, which means they have relatively low margins. Instead, the instruments that are purchased with each procedure and the servicing needed for the da Vinci system are driving margins higher. As more of these systems are installed, the percentage of high-margin revenue that Intuitive Surgical collects should rise. It's that simple.
Intuitive Surgical also has a very comfortable lead in terms of its installed system base relative to its competition. The company is currently closing in on 4,500 installed machines worldwide, according to an August investor presentation. You could add up all of its competitors, and they still wouldn't be within a stone's throw of Intuitive Surgical. And because the da Vinci system is so pricey -- and given the amount of training that goes into using it -- it's very unlikely a hospital would switch from Intuitive's device to a competitor's. This gives the company's current revenue stream quite a bit of predictability.
Finally, there's also plenty of room for market share expansion into colorectal and thoracic surgeries. Already possessing extensive market share in urology and gynecology surgeries, Intuitive Surgical is still just beginning to realize its long-term potential. It's a great example of a stock to set and forget.
Todd Campbell, Chris Neiger, and Sean Williams, The Motley Fool
Motley FoolSeptember 28, 2018 |
