Becton, Dickinson knows steady drips are steady profits

Becton, Dickson is a rare company, and we're not talking about its business model. It's 'rare' in that it's in a growth sector in the United States: health care/medical supplies. Becton is a top manufacturer of syringes, injection devices, and also makes IV catheters, surgical instruments, and elastic bandages, among other products.

Analysts expect a modest 2-4% rise in FY 2009 revenue, driven by a strong performance in its biosciences division, dampened by slower growth in diagnostics and medical units. What's more, there's visibility for growth in the detection of bacterial (including drug-resistant) infections and in the cervical cancer identification segments. The First Call FY 2009/FY 2010 EPS estimates for BDX are $4.93 to $5.44.

Margins are adequate, and research and development expenses are normal. The qualifiers? The Obama administration's health care system reforms are likely to change payouts for suppliers, forcing cuts by hospitals, which would affect BDX's business.

Stock Analysis: Becton, Dickinson is a moderate-risk stock. Consider buying a 25% position in BDX now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 50% of your BDX position in the first half of 2009. Sell/Stop Loss if you were to buy shares in this company: $43.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.