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Stock market crashes are an opportune time to buy. High quality companies, such as Intuitive Surgical, Inc., are impacted by general market panic and sell-off, but the fundamentals of these companies stay the same. In other words, now is the time to buy strong, well-proven stocks at an attractive discount.
Intuitive Surgical, Inc. designs, manufactures, and markets da Vinci surgical systems, and related instruments and accessories. Started in 1995, and run by CEO Gary Guthart, the company currently employs 5.53k people and with the stock’s market cap sitting at US$58b, it comes under the large-cap category. Volatility in the market is hardly detrimental to the financial health and business operations of a large, well-established company. Although some monetary and fiscal policy changes may impact some corporate financing decisions and strategy, what we’ve learnt over time is that these companies tend to adapt. And having a strong balance sheet and a history of proven success aids in this adaptability.
With zero debt on its balance sheet, Intuitive Surgical isn’t constrained to debt obligations and covenants, which can be burdensome during financial downturns. Highly-levered companies have to maintain a cash cushion to meet near-term interest payments as well as meet unforeseen circumstances. With no lenders’ needs to tend to, Intuitive Surgical enjoys financial flexibility and independence – an invaluable position to be in during bear markets. Also with a current cash holding of US$2.8b, Intuitive Surgical’s cash position is within a healthy range and more than sufficient to cover other upcoming liabilities, which means ISRG is financially robust in the face of a volatile market.
ISRG’s annual earnings growth rate has been positive over the last five years, with an average rate of 17%, overtaking the industry growth rate of 15%. It has also returned an ROE of 16% recently, above the industry return of 9.6%. Characteristics I value in a long term investment are proven in Intuitive Surgical, and I can continue to sleep easy at night with the stock as part of my portfolio.
Next Steps:Based on these three factors, ISRG makes for a strong long-term investment in the face of a fickle stock market. If you’re a risk averse investor, lining your portfolio with proven companies you’re willing to buy more and more of as the price falls, is a good strategy to build your wealth over the long run. This is the beginning of your research, but before you decide to buy ISRG, I highly urge you to understand more about the company, in particular, in these following areas:
- Future Outlook: What are well-informed industry analysts predicting for ISRG’s future growth? Take a look at our free research report of analyst consensus for ISRG’s outlook.
- Valuation: What is ISRG worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ISRG is currently mispriced by the market.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.