Medtronic: Finding the Bottom

The market cannot keep punishing this medical-device powerhouse, whose share price is down 21% in 2006.

Medtronic embodies everyone's frustration with the poor performance of so-called megacap stocks. Good earnings, a high return on equity, innovative new products, lots and lots of cash on the balance sheet -- you name it, Medtronic is a sound company. But merely being sound doesn't cut it in a market that remains hostile to the likes of big growth companies such as Microsoft, Wal-Mart and, yes, Medtronic.

Medtronic, by far the largest manufacturer of medical and orthopedic devices by stock-market value, has been a major disappointment to investors. At $45, the stock (symbol MDT) has essentially done nothing over the past five years, although the company's profits grew by 150% over that period.

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Jeffrey R. Kosnett
Senior Editor, Kiplinger's Personal Finance
Kosnett is the editor of Kiplinger's Investing for Income and writes the "Cash in Hand" column for Kiplinger's Personal Finance. He is an income-investing expert who covers bonds, real estate investment trusts, oil and gas income deals, dividend stocks and anything else that pays interest and dividends. He joined Kiplinger in 1981 after six years in newspapers, including the Baltimore Sun. He is a 1976 journalism graduate from the Medill School at Northwestern University and completed an executive program at the Carnegie-Mellon University business school in 1978.